The end of cheap Chinese labor

摘要

Till the late 1990s, Chinese labor cost relative to productivity was much lower than that of most other countries. This led to labor sourcing, followed by fast employment growth and rural-urban migration. Since the institutional reforms in late 1990s, China's labor markets and demographic transition have reduced and under pricing of Chinese labor seems to have come to an end. This paper has tried to sketch how Chinese labor market has undergone changes since 1978 until the late 1990s when institutional reforms were established and its present consequences. A detailed discussion on privatization of state-owned enterprises in the mid-1990s, the re-establishment of the labor market, and the slowdown of labor force growth and migration as the reasons for the wage growth has been presented. It also discusses how the Chinese economic growth is undergoing transition as the result of changes in the labor market. (31 refs.)