MORE COSTLY OR MORE PRODUCTIVE? MEASURING CHANGES IN COMPETITIVENESS IN MANUFACTURING ACROSS REGIONS IN CHINA

Vivian W. Chen, Harry Wu () and Bart van Ark ()

Review of Income and Wealth, 2009, vol. 55, issue s1, 514-537

Abstract: Using a newly constructed industry‐by‐region dataset based on China's two censuses, this paper examines the trend of average labor compensation (ALC), labor productivity (ALP) and unit labor cost (ULC) in 28 manufacturing industries across 29 provinces in China for 1995 and 2004. Findings show that at the aggregate level, ALP growth was generally faster than that of ALC and hence resulted in a significant decline in ULC for all regions in China. Furthermore, less developed regions exhibited stronger productivity growth relative to labor cost increase than more developed regions, thus leading to a convergence in ULC levels across provinces and regions over this period. Comparing individual industries, we observe a substantial variation in growth rates and convergence trends across regions. Logit regression analysis confirms that labor‐intensive industries are more likely to converge in ALP, ALC and ULC, whereas capital/skill‐intensive industries tended to diverge. This finding is further confirmed by estimating a convergence regression, which suggests that misallocation of resources due to market imperfections or institutional barriers is likely to be the main factor behind the divergence of ULC.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://doi.org/10.1111/j.1475-4991.2009.00329.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:revinw:v:55:y:2009:i:s1:p:514-537

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0034-6586

Access Statistics for this article

Review of Income and Wealth is currently edited by Conchita D'Ambrosio and Robert J. Hill

More articles in Review of Income and Wealth from International Association for Research in Income and Wealth Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().