DEMISE OF CHEAP CHINESE MANPOWER

End of Cheap Chinese Labor

Name

Professors Name

Course

Date
 DEMISE OF CHEAP CHINESE MANPOWER
2

Exam

1.1. How does the rate of growth of the average real wage compare with the growth rate

of labor productivity in the period between 1982 and 1997? Between 1982-1997 Chinas

GDP grew by 5.5%, and the manpower increased by 1.9%, indicating growth of labor

productivity by 3.6% annually. The number is nearly thrice the actual growth wage of 1.3%

on that time, suggesting that Chinese labor was becoming cheaper relative to productivity

during this period.

1.2. What are the implications of your findings for the evolution of the distribution of

aggregate income between wages and profits/surplus in that same period? This is a

quick sum that rarely changes in the quantity and quality of other inputs, for example, the

labor forces of assets. Chinese workforce also became cheaper relative to other countries.

Developing countries had a higher relative expense, but the Chinese workforce was higher

than developed countries. Chinas productivity growth was far much higher than wage

growth.

1.3. According to the Lewis model, what are the implications of the pattern above for the

economy's aggregate saving and investment rates and, by extension, for the rate of

expansion of the modern sector'? (see, esp., Lewis, 1954, pp. 416-420) Conditions that

do not rise relative to national earnings are possible to be imagined. The falling greatly of rent

plus profit relative to wages within the capitalist sector is required for capitalist employment to

rise rapidly. Although the rise in the capitalist sector involves an increase in income inequality,

as between capitalists and the rest, a mere imbalance of earnings is not adequate to ascertain a

high level of savings. Moreover, this analysis leads to the sociological challenge of the uprising

of a capitalist category: people who believe in investing all resources they have. This model also
 DEMISE OF CHEAP CHINESE MANPOWER
3

brings about a technical revolution. Nevertheless, it also assists to squarely address the state of

the economic backwardness of some countries. Naturally, most savings are done by groups who

acquire profits or rents. Worker's savings are too minimal.

2.1. Consider the author's decomposition of productivity growth during the 1990-2005

period, insection 3(c). Consider the unweighted country averages across regions, which are

reported on. 19-20, in Figure 9 and Table 3. What do their findings suggest regarding the

evolution of the shares of high- in total employment in Africa and Latin America during

that period? How can you tell? Save Answer. Asia's growth productivity of labor in 1990-

2005exceeded Africa’s by about 3% per anum and that of Latin America by 2.5% points. The

term structural change accounts for 1.64 points in Africa and 1.58% in Latin America from this

difference. This is evident by; The reduction in the distribution of structural change was a major

influence on the demise of Latin America's ability to produce from the 1960s.

2.2. Consider the author's analysis of structural change in Thailand during the 1990-2005

period insection 3(d) (see, esp., pp. 23-24 and figure 16). What do the data show regarding

the change in the shares of Agriculture and Manufacturing in total employment? The

change in structure was a drag on the productivity of Thailand economically. Thailand's

economy was opened up extensively by the interrelationship between agriculture and

manufacturing. Industries offered employment to locals in Thailand, which was also the case in

the agriculture field. Most commodities produced by agriculture are taken to the industries for

final manufacturing to come up with final products.

2.3. Given the initial differences in labor productivity between Agriculture and every other

sector in Thailand's economy in the period, what is the implication of the observed
 DEMISE OF CHEAP CHINESE MANPOWER
4

structural change pattern for aggregate productivity growth? (i.e., state whether the

observed reallocation of labor contributed to increasing or decreasing aggregate labor

productivity, and why.) Agricultural transformation occurs at different speeds in different

countries from different starting points. Agriculture serves as a major source of employment in

Thailand since it's Thailand's main livelihood source. The observed pattern leads to many people

venturing into agriculture, although their welfare gains in terms of welfare improvements based

on locations may differ. The observed labor contributed to increasing aggregate labor

productivity as most people depended on agriculture as their livelihood source.

 DEMISE OF CHEAP CHINESE MANPOWER
5

References
Li, H., Li, L., Wu, B., & Xiong, Y. (2012). The end of cheap Chinese labor. Journal of Economic
Perspectives, 26(4), 57-74.

Rein, S. (2012). The end of cheap China: Economic and cultural trends that will disrupt the world. John
Wiley & Sons.

Butollo, F. (2014). The End of Cheap Labour?: Industrial Transformation and Social Upgrading in
China (Vol. 9). Campus Verlag.

Brümmer, B., Glauben, T., & Thijssen, G. (2002). Decomposition of productivity growth using distance
functions: the case of dairy farms in three European countries. American Journal of Agricultural
Economics, 84(3), 628-644.

Kalirajan, K. P., Obwona, M. B., & Zhao, S. (1996). Decomposition of total factor productivity growth: the
case of Chinese agricultural growth before and after reforms. American Journal of Agricultural
Economics, 78(2), 331-338. Färe, R., Grosskopf, S., & Norris, M. (1997). Productivity growth, technical
progress, and efficiency change in industrialized countries: reply. The American Economic Review, 87(5),
1040-1044.