What was the Impact of Creating Better Jobs for more People in China’s Economic Transformation? What we know and Questions for Further Investigation

Dino Leonardo Merotto and Hanchen Jiang

No 33539544, Jobs Group Papers, Notes, and Guides from The World Bank

Abstract: The authors show that for China the movement of more people into better jobs with higher incomes formed a very important explanation for the country’s long-term success in growth and poverty reduction. China’s exporting cities created a virtuous cycle of new wage-employment-creating investments by new businesses making new products. The rapid increase in urban labor demand drew hundreds of millions of workers from the rural “traditional” sector to the “modern” sector, providing them with more reliable waged incomes. This dramatically raised the share of waged employment in China’s economy and unleashed new middle-class demand for more income-elastic goods and services. Growth in urban wages was moderated by regulated rural to urban labor migration under the Hukou system. This raised returns to capital, which maintained business incentives to re-invest their profits in new goods and services for which new markets were opening. Production of cheaper manufactured goods for the world market was an important catalyst, but domestic demand for services in China has maintained the momentum.

Keywords: labor productivity; labor productivity growth; per capita income; marginal propensity to save; gross fixed capital formation; wage employment; rural to urban migration; negative real interest rate; female labor force participation; lower level of education; per capita income growth; share of employment; capital per worker; Labor Compensation; returns to capital; increase in labor; household consumption; rural area; capital deepening; share of wage; urban labor migration; working age population; million people; fishing industry; share of labor; household survey data; agriculture industry; gross national income; demand for service; Labor Market; Homebased Work; fixed capital investment; cost of capital; share of work; accumulation of capital; years of schooling; Home Based Work; share of woman; factor of production; increase in capital; division of labor; output per worker; investment in buildings; old age dependency; employment in industry; gross capital formation; quality of job; change in demand; economies of scale; supply of labor; purchasing power parity; lack of skill; employment in agriculture; human capital accumulation; high productivity jobs; world market share; privileges and immunity; urban youth employment; private sector wage; return to education; real gdp; labor income; labor demand; Young Workers; labor transition; consumer demand; increased demand; job opportunities; urban population; virtuous cycle; rural worker; private household; value added; household saving; productivity gain; domestic economy; merchandise export; job opportunity; labor earning; rural employment; corporate profit; new product; wage work; wage growth; new investment; older worker; age category; world economy; trend growth; factor accumulation; employed persons; industry productivity; workers benefit; dynamic component; comparative advantage; urban worker; labor supply; demographic dividend; employment share; macro data; manufactured goods; modern sector; urban wage; domestic demand; Financial Sector; education level; private investment; urban employment; new market; total consumption; Employment Change; new job; fertility estimates; domestic service; global market; private consumption; global trade; worker type; Urban Transformation; rural-urban migration; employment increase; real share; trade war; Real estate; total wage; total employment; employment type; global economy; financial repression; ppp value; direct credit; women employment; domestic consumption; agriculture sector; young woman; increased export; external agencies; skilled labor; capital stock; real capital; consumption demand; migrant population; product category; vehicle demand; internal migration; construction industry; demographic change; employment rate; average wage; productivity increase; employment elasticity; pension system; monthly wage; migrant jobs; household income; consumption increase; rural location; urban growth; urban job; consumption survey; labor condition; replacement income; creating job; elderly dependents; trade datum; data service; dependency ratio; sampling frame; rural economy; average household; registration system; urban economy; investment climate; copyright owner; employment opportunities; employment opportunity; sole responsibility; original work; public policy; wage earnings; information gap; labor regulation; agglomeration effect; predatory practice; cross-section data; labor abundance; new demand; increased supply; commercial purpose; increased returns; regression results; business incentives; wage gap; in economics; jobs diagnostic; internationally comparable; survey modules; production method; wage income; individual characteristic; new business; migrant worker; production activity; traditional sector; take time; domestic saving; annual labor; commodity price; income category; richer countries; low inflation; consumption growth; aggregate data; empirical literature; lagged change; world trade; export boom; foreign saving (search for similar items in EconPapers)
Pages: 39
Date: 2021-10-26
New Economics Papers: this item is included in nep-cna
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