IDEAS home Printed from https://ideas.repec.org/p/arx/papers/1605.01949.html
   My bibliography  Save this paper

The wage transition in developed countries and its implications for China

Author

Listed:
  • Belal Baaquie
  • Bertrand M. Roehner
  • Qinghai Wang

Abstract

The expression "wage transition" refers to the fact that over the past two or three decades in all developed economies wage increases have levelled off. There has been a widening divergence and decoupling between wages on the one hand and GDP per capita on the other hand. Yet, in China wages and GDP per capita climbed in sync (at least up to now). In the first part of the paper we present comparative statistical evidence which measures the extent of the wage transition effect. In a second part we consider the reasons of this phenomenon, in particular we explain how the transfers of labor from low productivity sectors (such as agriculture) to high productivity sectors (such as manufacturing) are the driver of productivity growth, particularly through their synergetic effects. Although rural flight represents only one of these effects, it is certainly the most visible because of the geographical relocation that it implies; it is also the most well-defined statistically. Moreover, it will be seen that it is a good indicator of the overall productivity and attractivity of the non-agricultural sector. Because this model accounts fairly well for the observed evolution in industrialized countries, we use it to predict the rate of Chinese economic growth in the coming decades. Our forecast for the average annual growth of real wages ranges from 4% to 6% depending on how well China will control the development of its healthcare industry.

Suggested Citation

  • Belal Baaquie & Bertrand M. Roehner & Qinghai Wang, 2016. "The wage transition in developed countries and its implications for China," Papers 1605.01949, arXiv.org.
    • Handle: RePEc:arx:papers:1605.01949
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/1605.01949
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bertrand M. Roehner, 2009. "Hidden Collective Factors in Speculative Trading," Springer Books, Springer, number 978-3-642-03048-2, January.
    2. Lerman, Zvi & Kislev, Yoav & Biton, David & Kriss, Alon, 2003. "Agricultural Output and Productivity in the Former Soviet Republics," Economic Development and Cultural Change, University of Chicago Press, vol. 51(4), pages 999-1018, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baaquie, Belal Ehsan & Roehner, Bertrand M. & Wang, Qing-hai, 2017. "The wage transition in developed countries and its implications for China," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 470(C), pages 197-216.
    2. Peter Richmond & Bertrand M. Roehner, 2016. "Property bubble in Hong Kong: A predicted decade-long slump (2016-2025)," Papers 1608.03985, arXiv.org.
    3. Veronique Beckers & Jeroen Beckers & Matthias Vanmaercke & Etienne Van Hecke & Anton Van Rompaey & Nicolas Dendoncker, 2018. "Modelling Farm Growth and Its Impact on Agricultural Land Use: A Country Scale Application of an Agent-Based Model," Land, MDPI, vol. 7(3), pages 1-19, September.
    4. Pavliashvili, Johanna, 2009. "Servicekooperativen: Ein Modell für die georgische Landwirtschaft? [Service cooperatives – A model for the Georgian agriculture?]," IAMO Discussion Papers 125, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    5. Paviliashvili, Johanna, 2009. "Servicekooperativen – Ein Modell Für Die Georgische Landwirtschaft?," IAMO Discussion Papers 91767, Institute of Agricultural Development in Transition Economies (IAMO).
    6. Scott Rozelle & Johan F.M. Swinnen, 2004. "Success and Failure of Reform: Insights from the Transition of Agriculture," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 404-456, June.
    7. Fuglie, Keith, 2015. "Accounting for growth in global agriculture," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 4(3), pages 1-34, December.
    8. repec:zbw:iamodp:91767 is not listed on IDEAS
    9. Peter Richmond & Bertrand M. Roehner, 2017. "Property bubble in Hong Kong: A predicted decade-long slump (2016–2025)," Evolutionary and Institutional Economics Review, Springer, vol. 14(1), pages 79-99, June.
    10. Lerman, Zvi, 2007. "Agricultural Recovery in CIS: Lessons of 15 Years of Land Reform and Farm Restructuring," 104th Seminar, September 5-8, 2007, Budapest, Hungary 8530, European Association of Agricultural Economists.
    11. Ballatore, Benedetto Francesco, 2021. "The importance of Russia’s agricultural sector in the MENA geopolitics," MPRA Paper 106440, University Library of Munich, Germany, revised 05 Mar 2021.
    12. Margarita Grazhdaninova & Zvi Lerman, 2005. "Allocative and Technical Efficiency of Corporate Farms in Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 47(1), pages 200-213, March.
    13. Stefan Osborne & Michael A. Trueblood, 2006. "An examination of economic efficiency of Russian crop production in the reform period," Agricultural Economics, International Association of Agricultural Economists, vol. 34(1), pages 25-38, January.
    14. Ikeme, Sionegael & Han, Doo Bong, 2021. "The Impacts of the EU Integration on Food Production in Baltic Countries," 2021 Annual Meeting, August 1-3, Austin, Texas 313989, Agricultural and Applied Economics Association.
    15. Lerman, Zvi & Sutton, William R., 2006. "Productivity And Efficiency Of Small And Large Farms In Moldova," Discussion Papers 7133, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    16. Hofman, Irna & Visser, Oane, 2014. "Geographies of transition: The political and geographical factors of agrarian change in Tajikistan," IAMO Discussion Papers 199945, Institute of Agricultural Development in Transition Economies (IAMO).
    17. Zvi Lerman, 2008. "Agricultural recovery in the former Soviet Union: an overview of 15 years of land reform and farm restructuring," Post-Communist Economies, Taylor & Francis Journals, vol. 20(4), pages 391-412.
    18. Jenderedjian, Anna & Bellows, Anne C., 2019. "Addressing food and nutrition security from a human rights-based perspective: A mixed-methods study of NGOs in post-Soviet Armenia and Georgia," Food Policy, Elsevier, vol. 84(C), pages 46-56.
    19. Slanina, Frantisek, 2013. "Essentials of Econophysics Modelling," OUP Catalogue, Oxford University Press, number 9780199299683.
    20. Tubetov, Dulat & Musshoff, Oliver & Kellner, Ulla, 2012. "Investments in Kazakhstani Dairy Farming: A Comparison of Classical Investment Theory and the Real Options Approach," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 51(3), pages 1-28, August.
    21. repec:zbw:iamodp:199945 is not listed on IDEAS
    22. Miguel Martín-Retortillo & Vicente Pinilla, 2019. "The fundamental causes of economic growth: a comparative analysis of the total factor productivity growth of European agriculture, 1950-2005," Documentos de Trabajo (DT-AEHE) 1912, Asociación Española de Historia Económica.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:1605.01949. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.