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The Supply and Demand Factors Behind the Relative Earnings Increases in Urban China at the Turn of the 21st Century

Author

Listed:
  • Gao, Hang

    (University of Alberta, Department of Economics)

  • Marchand, Joseph

    (University of Alberta, Department of Economics)

  • Song, Tao

    (University of Alberta, Department of Economics)

Abstract

Real earnings have increased for all demographic and skill groups within China’s urban labor market from the mid-1990s to the early 2000s. This paper analyzes these changes in earnings with respect to the relative supply and demand changes of each of the imperfectly substitutable labor inputs. These movements are found to be consistent with real earnings increases for some of the input groups but are inconsistent for others. This implies that China has transitioned closer to a free labor market from its planned origin. In addition, labor supply is shown to be moving towards a more educated workforce, and firm privatization and international trade are found to play significant roles in determining the labor demand movements.

Suggested Citation

  • Gao, Hang & Marchand, Joseph & Song, Tao, 2011. "The Supply and Demand Factors Behind the Relative Earnings Increases in Urban China at the Turn of the 21st Century," Working Papers 2011-23, University of Alberta, Department of Economics, revised 01 Sep 2012.
    • Handle: RePEc:ris:albaec:2011_023
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    File URL: https://sites.ualberta.ca/~econwps/2011/wp2011-23.pdf
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    References listed on IDEAS

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    1. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    2. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    3. J. DavidBrown & JohnS. Earle & Álmos Telegdy, 2010. "Employment and Wage Effects of Privatisation: Evidence from Hungary, Romania, Russia and Ukraine," Economic Journal, Royal Economic Society, vol. 120(545), pages 683-708, June.
    4. Dong, Xiao-yuan & Xu, Lixin Colin, 2009. "Labor restructuring in China: Toward a functioning labor market," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 287-305, June.
    5. J. David Brown & John S. Earle & Almos Telegdy, 2006. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 61-99, February.
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    8. Appleton, Simon & Song, Lina & Xia, Qingjie, 2005. "Has China crossed the river? The evolution of wage structure in urban China during reform and retrenchment," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 644-663, December.
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    10. Olivier Bargain & Sumon Kumar Bhaumik & Manisha Chakrabarty & Zhong Zhao, 2009. "Earnings Differences Between Chinese And Indian Wage Earners, 1987–2004," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(s1), pages 562-587, July.
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    Cited by:

    1. Dammert, Ana C. & Ural Marchand, Beyza & Wan, Chi, 2013. "Gender Wage-Productivity Differentials and Global Integration in China," IZA Discussion Papers 7159, Institute of Labor Economics (IZA).
    2. Ana C. Dammert & Beyza Ural Marchand, 2015. "Privatization In China: Technology And Gender In The Manufacturing Sector," Contemporary Economic Policy, Western Economic Association International, vol. 33(2), pages 250-264, April.

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    More about this item

    Keywords

    China; earnings; labor demand; labor supply; transitional economies;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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