The Labor Market in Post-Reform China: History, Evidence, and Implications
China's Labor Cost Advantages Are Shifting But Will Remain Formidable
Cliff Waldman is the Global Economist for the Manufacturers Alliance/MAPI,
a business research organization. He follows national and global economic
trends and does specialized research on the Chinese economy. For five
years, he served as president of Waldman Associates, an economic
consulting firm in Arlington, VA. Also, he worked in the research arm
of the National Federation of Independent Business (NFIB), America's
largest trade group for small firms. Before coming to Washington he
served as a Research Economist for the New Jersey Department of Labor.
He received his BA and MA in economics from Rutgers University.
Concern over China's growing economic power has focused attention on its prevailing wage, which—in spite of recent strong growth—remains a fraction of that of the industrialized countries. This paper analyzes the recent history and current structure of China's emerging labor market with the use of published econometric evidence of Chinese wage determination and with recent labor market, macroeconomic, and demographic data. The results indicate that wages of skilled Chinese workers will accelerate enough for the skilled wage gap with the industrialized world to narrow appreciably over the coming years. China's advantage in semiskilled and unskilled labor costs, however, will continue for an indefinite period.