Recent developments in China's labor market: Labor shortage, rising wages and their implications
Yuming Cui
School of Economics and Management, Harbin Institute of Technology, Shenzhen, China
Search for more papers by this authorJingjing Meng
School of Economics and Management, Beijing University of Posts and Telecommunications, China
Search for more papers by this authorCorresponding Author
Changrong Lu
School of International Relations, Sun Yat-Sen University, China
Correspondence
Changrong Lu, School of International Relations, Sun Yat-Sen University, China.
Email: [email protected]
Search for more papers by this authorYuming Cui
School of Economics and Management, Harbin Institute of Technology, Shenzhen, China
Search for more papers by this authorJingjing Meng
School of Economics and Management, Beijing University of Posts and Telecommunications, China
Search for more papers by this authorCorresponding Author
Changrong Lu
School of International Relations, Sun Yat-Sen University, China
Correspondence
Changrong Lu, School of International Relations, Sun Yat-Sen University, China.
Email: [email protected]
Search for more papers by this authorAbstract
China's abundant supply of cheap labor has played an important role in its remarkable economic and social development. Recently, however, China has experienced a labor shortage and rising wages, implying that the country's long-lasting competitive advantage based on its “unlimited” labor supply and low costs is vanishing. We find that structural demographic changes, regional economic growth disparities and the household registration system may have caused the labor shortage. Furthermore, China's continued low wages, relatively low labor share of gross national income, declining proportion of household consumption to GDP, and productivity improvements as well as increasing unit labor costs can be used to explain the recent wage increases. The dramatic development of its labor market signals that China is entering a new stage of economic development. The country's prior successful model of economic development needs to be adjusted to adapt to the new situation in its labor market to achieve sustainable economic development.
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