Just How Low Are China's Labour Costs?
Document Type
Article
Publication Date
4-1-2007
Published In
World Economy
Abstract
This paper provides a new perspective on Chinese international competitiveness in manufacturing using relative unit labour costs. We find that Chinese unit labour costs are about 25–40 per cent of US labour costs. They are also low relative to costs in the EU, Japan, Mexico, Korea and most other newly industrialising countries. However, China's relative unit labour costs indicate a substantially smaller cost advantage than that implied by a comparison of wages alone. China's cost advantage derives from large currency devaluations that preceded the establishment of a de facto peg around 1995, and rapid productivity growth in the period since 1995.
Recommended Citation
J. Ceglowski and Stephen S. Golub.
(2007).
"Just How Low Are China's Labour Costs?".
World Economy.
Volume 30,
Issue 4.
597-617.
DOI: 10.1111/j.1467-9701.2007.01006.x
https://works.swarthmore.edu/fac-economics/35