Labor Market Developments in China: A Neoclassical View

Suqin Ge and Dennis Yang

No 5377, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper assesses the applicability of two alternative theories in understanding labor market developments in China: the classical view featuring a Lewis turning point in wage growth versus a neoclassical framework emphasizing rational choices of individuals and equilibrating forces of the market. Empirical evidence based on multiple data sources fails to validate the arrival of the Lewis turning point in China, showing continuous and coordinated wage growth across rural and urban sectors instead. Consistent with the neoclassical view, we find that rural workers expanded off-farm work when mobility restrictions were lifted, interprovincial migration responded to expected earnings and local employment conditions, and returns to education converged gradually to the international standard. These findings suggest major progresses in the integration of labor markets in China.

Keywords: wage growth; labor markets; rural-urban migration; Lewis turning point; schooling returns; China (search for similar items in EconPapers)
JEL-codes: J21 J31 O11 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-12
New Economics Papers: this item is included in nep-lab, nep-mig and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - published in: China Economic Review, 2011, 22 (4), 611-625

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Journal Article: Labor market developments in China: A neoclassical view (2011)
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