Rising Wages: Has China Lost Its Global Labor Advantage?
We document dramatically rising wages in China for the period 1978-2007 based on multiple sources of aggregate statistics. Although real wages increased seven-fold during the period, growth was uneven across ownership categories, industries, and regions. In the last decade, wages in state-owned enterprises increased rapidly and wage disparities between those in skill-intensive and labor-intensive industries have widened. Comparisons of international data show that China’s manufacturing wage has already converged with that of emerging markets in Asia, but China still enjoys enormous labor cost advantages over neighboring developed economies. Our analysis suggests that China’s wage growth will stabilize to a moderate pace in the near future.