2019/05 | LEM Working Paper Series | ||||||||||||||||
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The Wage-Productivity Nexus in the World Factory Economy |
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Giovanni Dosi, Maria Enrica Virgillito and Xiaodan Yu. |
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Keywords | |||||||||||||||||
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Wage; Productivity; Distributions; Chinese Industrialization.
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JEL Classifications | |||||||||||||||||
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L6, D22, D24, J31
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Abstract | |||||||||||||||||
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This paper highlights new findings on the wage-productivity nexus in the
World Factory Economy. After presenting the long-run macro-elasticity
characterizing the phase of Chinese economic development since the
eighties, we look at the wage-productivity nexus from a micro level
perspective using a detailed firm-level dataset covering the period of
ownership restructuring (1998-2007). A few results are quite robust
under different estimation strategies. First, throughout the impressive
Chinese economic miracle, elasticities of real wages to productivities –
that is the ratios of rates of variations of the former to the latter –
are always positive both under pooled and longitudinal estimates, both
at firm- and sectoral-levels. Second, such elasticities are dramatically
low, and falling in many distinct phases since the late seventies. That
is, even in the manufacturing sector, the distribution of gains from the
impressive labour productivity growth appears to be markedly uneven.
Finally, third, governance institutions seem to matter a lot, with the
majority of ownership types exhibiting firm-specific wage determination
processes. The low elasticities of wages to productivity are plausibly
the consequence of the massive flow of migrant workers from the rural
areas to the coasts, somewhat resembling the early phase of the English
Industrial Revolution with the pattern of enclosure in the country-side
and massive migrations to the industrial towns.
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