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Toward a Consumer Economy in China: Implications of Changing Wage Policies for U.S. Cotton Exports

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  • MacDonald, Stephen
  • Pan, Suwen
  • Hudson, Darren
  • Tuan, Francis C.

Abstract

The effect of a Chinese minimum wage increase on China’s textile market as well as on the world cotton market is evaluated. Based on a Nonlinear Quadratic Almost Ideal Demand System (NQAIDS) model of China’s textile demand, the results suggest that the income elasticity for textiles is around 0.6 in China, and that apparel is less price responsive than home textiles and other textile products. Simulation results suggest that a minimum wage increase would raise Chinese domestic textile consumption and lower Chinese textile exports. Most of the decline in textile exports by China is offset by expansion in other countries’ domestic textile production and results in a slight increase in world cotton mill utilization and higher clothing prices.

Suggested Citation

  • MacDonald, Stephen & Pan, Suwen & Hudson, Darren & Tuan, Francis C., 2011. "Toward a Consumer Economy in China: Implications of Changing Wage Policies for U.S. Cotton Exports," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103615, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103615
    DOI: 10.22004/ag.econ.103615
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    Cited by:

    1. MacDonald, Stephen, 2014. "China's Cotton Policy: New Directions in 2014," Agricultural Outlook Forum 2014 168616, United States Department of Agriculture, Agricultural Outlook Forum.

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    More about this item

    Keywords

    Demand and Price Analysis; International Development; International Relations/Trade;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • R34 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Input Demand Analysis
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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