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“Made in China” matters: Integration of the global labor market and the global labor share decline

Xiang Xu, David Daokui Li and Mofei Zhao

China Economic Review, 2018, vol. 52, issue C, 16-29

Abstract: We show that the integration of Chinese labor into the global labor market has played a key role in the global labor share decline since the late 1970s. Several key institutional changes, including the “reform and opening-up” that began in the late 1970s and China's entry into the WTO in 2001, accelerated this process. We build a two-country dual economic model to explain how labor shares decline in labor-intensive and capital-intensive countries simultaneously. Our empirical results show that the integration of Chinese labor significantly affects the global labor share, mainly through the channel of international trade and especially processing trade business.

Keywords: Global labor share; Labor migration; Dual economy (search for similar items in EconPapers)
JEL-codes: E21 E22 E25 (search for similar items in EconPapers)
Date: 2018
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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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