Accounting for Rising Wages in China

Speaker : Prof. Dennis Tao Yang
Professor of Economics, Chinese University of Hong Kong

Date :  Tuesday, 31 March 2009
Time :  2:00 p.m. – 3:30 p.m.


Between 1992 and 2006, average real wage in urban China increased by 196 percent. A decomposition analysis reveals that 77 percent of the total growth is attributable to increases in pay for basic labor, returns to human capital, and state-sector wage premiums. Using a two-sector labor market equilibrium model, we explore a simple, explicit mechanism for understanding the determination of basic wage and wage premiums under globalization and economic transition, which are key features of the Chinese economy. This framework provides a structural basis for studying sources of wage growth using human capital wage functions. Our empirical analysis shows that globalization factors, state-sector restructuring, and skill-biased technological change are the major causes behind the recent wage explosion in China.



Dennis T. Yang is Professor of Economics at the Chinese University of Hong Kong and Virginia Polytechnic Institute and State University. He is also Senior Fellow of the Center for China in the World Economy at Tsinghua University and Senior Advisor to The Conference Board China Center for Economics and Business.  He was previously a member of the faculty in economics at Duke University, where he also served as the Associate Director of the Center for Chinese Populations and Socioeconomic Studies. His main research interests are economic development and growth, labor and demographic economics, and the economics of China and transition. Professor Yang has published widely in leading academic journals including Journal of Political Economy, American Economic Review, Economic Journal, Journal of Monetary Economics, Journal of Development Economics and Journal of Comparative Economics. He is the co-editor of two books on economic reforms in China and currently serves on the Editorial Boards of several international economic journals. Professor Yang obtained his undergraduate degree at the University of California Los Angeles and his Ph.D. in economics from the University of Chicago.  


Co-hosted by:

Centre for Public Policy Studies
Department of Economics


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