Employment distribution by sector, 1980, 1990, 2000,
China
1980
1990
2000
Primary
68.7
60.1
50.0
Secondary
18.2
21.4
22.5
Tertiary
13.1
18.5
27.5
The Earnings of Labor
Important to smooth the way for job creation along with SOE reform.
Existing institutions hinder job creation.
Figure 2.3 Employment Distribution by Major Industrial Sector, 1990-1997
Price Index
100.0
108.1
128.1
100.0
207.7 354.4
165.2 331.0
Problems with CPI
Difficulties in estimating price index:
– quality changes – selection of stores – treatment of new products – using outdated weights
$7.90 $12.69 $11.51
$7.64 $12.26 $12.26
inflation less 1% per year)
1978 1980 1985 1990 2000
中国全国各种价格总指数
商品零售价格 居民消费价格指
指数
数
General Retail General Consumer
Price Index
Overview of the Labor Market
Structure of the Lecture
Basic labor market statistics Labor demand Labor supply Labor market equilibrium Applications: effects of institutions and policies on labor market equilibrium
Basic Labor Market Statistics
Structure of labor force Unemployment statistics Sectoral trend of employment Labor earnings Problems with wage deflators
Tab.1
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Consumption Urban Rural
405 406 496 520 526 547 598 802 833 1089 1431 1568 1686 1925 2356 3027 3891 4874 5430 5796 6182 6996 --
(C)=(A)/(B)*100 Average hourly earnings. 1997 dollars (using CPI)
(D)=(A)/[(B)/160.5] Average hourly earnings. 1997 dollars (using CPI
$8.31 $13.33 $11.00
If we had a more accurate measure of consumer prices, it would be concluded that such wages have increased by about a third.
Problem with Chinese Price Indexes
Unemployment rate is high when the rate of destruction is higher than the rate of creation.
Job Creation and Destruction in China
MOA official: 20M farmers to lose jobs due to WTO entry.
It is relevant to our understanding of how well the economy has functioned.
Using the officially published estimates of the U.S. CPI, it is generally concluded that the real wages of the lower wage workers have not increased over the past two or three decades.
Problem with Chinese Price Indexes (3)
From 1978 to 1999, Consumption: urban index increased by 25.9 percent more than the rural index. Income: urban index increased by 35.5 percent more than the rural index. Reason: Quality change unaccounted for. Quality improvement much faster in urban than in rural. Statistical system needs a major revamp.
– 86.8% in 1950, 77.9% in 1980, 75.0% in 1997
LFPRs for women are rising
– 33.9% in 1950, 51.6% in 1980, 59.8% in 1997
China? No data yet.
Pattern of unemployment rates
138 152 178 192 210 232 265 347 351 417 508 553 571 621 718 855 1118 1434 1768 1876 1895 1927
--
Income
Living Expenditure
Urban Rural Urban Rural
344 134
478 500 535 573 660 739 900 1002 1181 1376 1510 1701 2027 2577 3496 4283 4839 5160 5425 5854 6280
Figure 2.1 Labor Force Status of the U.S. Adult Population, 1994
Labor Force Participation Rates
Definition: labor force/ population over 16
LFPRs for men are falling
– Consumption: 5.2% more – Income: 31.3%. – This implies narrowing urban-rural gap in
real terms.
Problem with Chinese Price Indexes (2)
Observations indicate otherwise. An evidence: % income devoted to food declined more in urban than in rural. Problem lies in large differences in price indexes used to deflate two series of nominal consumption.
1977
1987
1997
Average hourly earnings (current price) (A)
$5.25
$8.98
$12.26
CPI using 1982-84 as a base
63.2
113.6
160.5
(B) Average hourly earnings. 1982-1984 dollars (using CPI)
Boskin Commission: U.S. CPI overestimated by 1% annually in the past 20 years. This means that the growth of real wages have been under-estimated.
Why is accurate price index important?
Industrial and occupational shifts due to
– economic development – international trade – economic reform
Job are destroyed and created simultaneously.
The gross change is not captured by unemployment rate.
Many other scholars: SOE reform will bring massive job losses.
Pessimism due to the lack of attention paid to job creation.