Wage and Price Dynamics in a Large Emerging Economy: The Case of China

26 Pages Posted: 26 Jan 2014

See all articles by Carsten A. Holz

Carsten A. Holz

Hong Kong University of Science & Technology (HKUST) - Division of Social Science

Aaron N. Mehrotra

Bank for International Settlements (BIS)

Date Written: January 20, 2014

Abstract

This study finds that the growth in labour costs in China is not passed through fully to final prices in China, neither in the tradable goods sector nor in the economy as a whole. This probably reflects the strong pressure on profit margins from a highly competitive environment, especially in manufactured goods. The potential implications of labour cost increases in China for global inflation pressures are also discussed.

Keywords: labour costs, inflation, China, global economic slack, globalisation

JEL Classification: E31, F42, J30

Suggested Citation

Holz, Carsten A. and Mehrotra, Aaron N., Wage and Price Dynamics in a Large Emerging Economy: The Case of China (January 20, 2014). BOFIT Discussion Paper No. 3/2014, Available at SSRN: https://ssrn.com/abstract=2384539 or http://dx.doi.org/10.2139/ssrn.2384539

Carsten A. Holz

Hong Kong University of Science & Technology (HKUST) - Division of Social Science ( email )

Division of Social Science
Clear Water Bay
Clear Water Bay, Kowloon
Hong Kong

Aaron N. Mehrotra (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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