The End of Cheap Chinese Labor

2012 ◽  
Vol 26 (4) ◽  
pp. 57-74 ◽  
Author(s):  
Hongbin Li ◽  
Lei Li ◽  
Binzhen Wu ◽  
Yanyan Xiong

In recent decades, cheap labor has played a central role in the Chinese model, which has relied on expanded participation in world trade as a main driver of growth. At the beginning of China's economic reforms in 1978, the annual wage of a Chinese urban worker was only $1,004 in U.S. dollars. The Chinese wage was only 3 percent of the average U.S. wage at that time, and it was also significantly lower than the wages in neighboring Asian countries such as the Philippines and Thailand. The Chinese wage was also low relative to productivity. However, wages are now rising in China. In 2010, the annual wage of a Chinese urban worker reached $5,487 in U.S. dollars, which is similar to wages earned by workers in the Philippines and Thailand and significantly higher than those earned by workers in India and Indonesia. China's wages also increased faster than productivity since the late 1990s, suggesting that Chinese labor is becoming more expensive in this sense as well. The increase in China's wages is not confined to any sector, as wages have increased for both skilled and unskilled workers, for both coastal and inland areas, and for both exporting and nonexporting firms. We benchmark wage growth to productivity growth using both national- and industry-level data, showing that Chinese labor was kept cheap until the late 1990s but the relative cost of labor has increased since then. Finally, we discuss the main forces that are pushing wages up.

2020 ◽  
Vol 110 ◽  
pp. 356-361
Author(s):  
Daron Acemoglu ◽  
Pascual Restrepo

We extend the canonical model of skill-biased technical change by modeling the allocation of tasks to factors and allowing for automation and the creation of new tasks. In our model, factor prices depend on the set of tasks they perform. Automation can reduce real wages and generate sizable changes in inequality associated with small productivity gains. New tasks can increase or reduce inequality depending on whether they are performed by skilled or unskilled workers. Industry-level data suggest that automation significantly contributed to the rising skill premium, while new tasks reduced inequality in the past but have contributed to inequality recently.


2021 ◽  
Vol 13 (23) ◽  
pp. 12952
Author(s):  
Haitham Esam Rababah ◽  
Azhar Ghazali ◽  
Mohd Hafizal Mohd Isa

Fossil fuel consumption for electricity generation in the building sector is at an all-time high in line with the country’s economic growth. This scenario will increase the global CO2 emissions and large carbon footprints, thus leading to global warming. In recent years, most of the research related to the building sector has focused on the development of new techniques to reduce buildings’ energy consumption through energy conservation, energy efficiency, and the implementation of renewable energy technologies. The introduction of photovoltaic (PV) technology has become the most prominent renewable energy (RE) that can be integrated into building components. Even though the Building Integrated Photovoltaic (BIPV) has been available for decades, but its implementation in Southeast Asian countries has not gained widespread acceptance compared to European countries and other parts of Asia. This paper aims to investigate the effects and challenges of BIPV implementation in Southeast Asian Countries (Cambodia, Indonesia, Laos, Malaysia, Singapore, Thailand, Vietnam, and the Philippines), focusing on climate effects, the initial cost of PV technology, government policies, and initiatives. An in-depth literature review from past research, policies, and reports taken between 2016 to 2021 has been conducted and found that the environmental parameters directly influence the performance of BIPV systems and affect efficiency. This study pointed at Feed-in Tariff (FiT), policies and initiatives offered by the government in Southeast Asian countries are not beneficial and discourage building owners to adopt the BIPV technology or any other RE technology. Governments should revise the current policies to promote and attract more building owners to take part in the efforts to minimize CO2 emissions from the building industry.


2020 ◽  
Author(s):  
Boško Mijatović ◽  
Branko Milanovic

The paper presents the first estimate of the welfare ratio for Serbia using the 19th and early 20th century data on wages of skilled and unskilled workers (including the part paid in kind) and prices of goods that enter into “subsistence” and “respectability” consumption baskets. It finds a stagnation of unskilled wage close to the welfare ratio of 1, and a modest increase in skilled wage. The paper introduces several adjustments to conventional methodology in order to make it more relevant for predominantly agricultural societies. (Stone Center on Socio-Economic Inequality Working Paper)


2018 ◽  
Vol 35 (1) ◽  
pp. 52-80 ◽  
Author(s):  
Shruti Sharma

This paper examines the differential effects, based on the size of the plant, of industry-level foreign direct investment (FDI) on plant-level employment and the wages of skilled and unskilled workers in India's manufacturing sector. On average, there are strong positive differential effects of increased inward-level FDI for large plants relative to small and average-sized plants in terms of employment and the average wages of both skilled and unskilled workers. Small plants experience negative effects from inward FDI, which can be explained by intra-industry reallocation of output from smaller to larger plants. After conducting a regional analysis, I find positive spillovers to small plants in Indian states that receive large and persistent flows of FDI. This suggests that a critical mass of FDI is necessary for small plants to experience positive spillover effects.


2021 ◽  
Vol 65 (10) ◽  
pp. 91-102
Author(s):  
N. Rogozhina

The choice of the countries of Southeast Asia as an example for analyzing the nature of interaction between developing countries and China within the framework of the Belt and Road Initiative is not accidental. The very logic of China’s stated goals of gaining dominant positions in the world economy and politics makes it inevitable that the countries of Southeast Asia located in geographic proximity to it are included in its long-term economic and political plans. The question, however, is to what extent do they meet the interests of the Southeast Asian countries themselves? The solution to this question is the main subject of research in the article. There are objective prerequisites for mutually beneficial cooperation. The Belt and Road projects are viewed by China as a tool for economic expansion into the region with the prospect of taking a leading position there, using the interest of Southeast Asian countries in the inflow of foreign investment to create modern infrastructure, the lack of which narrows their opportunities for further economic growth, maintaining competitiveness and developing integration ties within ASEAN Community. Expert assessments made by international organizations confirm the positive impact of OBOR projects on the economic development of Southeast Asian countries and although today it is too early to draw any conclusions, since the initiative is only at the initial stage of its implementation in the region, nevertheless the case studies presented in the article indicate a mismatch in the positions of the parties on a number of issues related to the financing of projects, their lack of transparency. non-compliance with environmental and social requirements. The support of the initiative on the part of the Southeast Asian countries does not automatically mean their acceptance of the terms of the agreements proposed by China, which are far from always consistent with their national interests and give rise to fears in society about its expansionist intentions. Therefore, in many Southeast Asian countries, participation in OBOR projects is turning into a subject of political discourse, which reflects the presence of disagreements in society and confrontation of interests regarding the advisability of rapprochement with China, given the associated economic and political risks. The countries of Southeast Asia can be conditionally divided into two groups according to their relation to the Belt and Road initiative. The first group includes Indonesia, Malaysia, Singapore, the Philippines, Thailand, Vietnam and Myanmar, whose position can be described as national pragmatism. While supporting the Chinese initiative in general, they nevertheless assess the possible risks of their participation in projects and seek to reduce them. The second group is represented by Laos and Cambodia, whose leadership unconditionally supports the Chinese initiative, guided by the interests of their own survival, which largely depends on Chinese assistance. Therefore, the prospect of falling into a debt trap and increasing economic dependence on the PRC and even the threat of losing sovereignty does not deter them from participating in highly controversial projects from a commercial point of view. Based on the analysis made, the author comes to the conclusion that, given the existing alignment of political forces in Southeast Asia, China can count on promoting its initiative in the region, which, however, does not automatically lead to an increase in its political influence and to the creation of a China-centric model of regional order. Acknowledgements. The article was prepared within the project “Post-crisis world order: challenges and technologies, competition and cooperation” supported by the grant from Ministry of Science and Higher Education of the Russian Federation program for research projects in priority areas of scientific and technological development (agreement № 075-15-2020-783).


Sign in / Sign up

Export Citation Format

Share Document