Toward a Consumer Economy in China: Implications of Changing Wage Policies for U.S. Cotton Exports

Stephen MacDonald, Suwen Pan, Darren Hudson and Francis C. Tuan

No 103615, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: The effect of a Chinese minimum wage increase on China’s textile market as well as on the world cotton market is evaluated. Based on a Nonlinear Quadratic Almost Ideal Demand System (NQAIDS) model of China’s textile demand, the results suggest that the income elasticity for textiles is around 0.6 in China, and that apparel is less price responsive than home textiles and other textile products. Simulation results suggest that a minimum wage increase would raise Chinese domestic textile consumption and lower Chinese textile exports. Most of the decline in textile exports by China is offset by expansion in other countries’ domestic textile production and results in a slight increase in world cotton mill utilization and higher clothing prices.

Keywords: Demand and Price Analysis; International Development; International Relations/Trade (search for similar items in EconPapers)
Pages: 25
Date: 2011
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Journal Article: Toward a consumer economy in China: implications of changing wage policies for U.S. cotton exports (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea11:103615

DOI: 10.22004/ag.econ.103615

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