Wage and Price Dynamics in China

19 Pages Posted: 8 Aug 2016

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: August 2016

Abstract

We study wage‐price dynamics in Mainland China with a novel data set using province‐level data from 1994 to 2010. We find that the growth in labour costs in China is not passed through fully to final prices, 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. These findings have potential implications for global price developments, given China's relevance in global supply chains.

Suggested Citation

Holz, Carsten A. and Mehrotra, Aaron N., Wage and Price Dynamics in China (August 2016). The World Economy, Vol. 39, Issue 8, pp. 1109-1127, 2016, Available at SSRN: https://ssrn.com/abstract=2819242 or http://dx.doi.org/10.1111/twec.12399

Carsten A. Holz (Contact Author)

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

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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