Growing Wages and Changing Demand for Workers in Chinese Enterprises

Du Yang

Institute of Population and Labor Economics, Chinese Academy of Social Sciences, Beijing, China

Abstract: Taking advantage of company survey data, this paper examines the responsiveness of enterprises in manufacturing sectors to the recent labor market changes characterized by surging wages and shrinking unskilled workers. The result shows that the labor demand elasticity with regard to output is substantial. In other words, growing manufacturing will keep creating jobs and intensify labor scarcity in China. The wage elasticity is -0.40 for unskilled workers and -0.53 for skilled workers, which indicates that Chinese companies are quite responsive to the recent labor market changes. There exists a kind of substitution effect between skilled and unskilled workers, however, the magnitude of elasticity remains small. To promote economic upgrading in China’s labor market, institutional and industrial policies should encourage companies to be responsive to the warning signals from the market of production factor.
Keywords: labor demand, wage elasticity, substitution elasticity

¥0.01加入购物车