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Does China Still Have a Labor Cost Advantage?

Author

Listed:
  • Ceglowski Janet

    (Bryn Mawr College)

  • Golub Stephen S.

    (Swarthmore College)

Abstract

In recent years wages in China have been rising and the yuan has appreciated, potentially eroding China’s cost advantage in manufactures. This paper explores the evolution of China’s relative unit labor costs in manufacturing over 1998-2009. Between 1998 and 2003 China’s unit labor costs fell, but since 2003 they have increased both absolutely and relative to US unit labor costs. Much of the rise in China’s relative unit labor costs can be traced to a real appreciation of the yuan against the dollar. Despite the recent rise, China’s unit labor costs remain low relative to those in most other countries.

Suggested Citation

  • Ceglowski Janet & Golub Stephen S., 2012. "Does China Still Have a Labor Cost Advantage?," Global Economy Journal, De Gruyter, vol. 12(3), pages 1-30, September.
    • Handle: RePEc:bpj:glecon:v:12:y:2012:i:3:n:6
    DOI: 10.1515/1524-5861.1874
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    References listed on IDEAS

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    More about this item

    Keywords

    China; labor costs; productivity; international competitiveness; real exchange rate;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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