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“Made in China” matters: Integration of the global labor market and the global labor share decline

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  • Xu, Xiang
  • Li, David Daokui
  • Zhao, Mofei
Abstract
We show that the integration of Chinese labor into the global labor market has played a key role in the global labor share decline since the late 1970s. Several key institutional changes, including the “reform and opening-up” that began in the late 1970s and China's entry into the WTO in 2001, accelerated this process. We build a two-country dual economic model to explain how labor shares decline in labor-intensive and capital-intensive countries simultaneously. Our empirical results show that the integration of Chinese labor significantly affects the global labor share, mainly through the channel of international trade and especially processing trade business.

Suggested Citation

  • Xu, Xiang & Li, David Daokui & Zhao, Mofei, 2018. "“Made in China” matters: Integration of the global labor market and the global labor share decline," China Economic Review, Elsevier, vol. 52(C), pages 16-29.
    • Handle: RePEc:eee:chieco:v:52:y:2018:i:c:p:16-29
    DOI: 10.1016/j.chieco.2018.05.008
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    Cited by:

    1. Yanwei Zhang & Hualin Xie, 2019. "Interactive Relationship among Urban Expansion, Economic Development, and Population Growth since the Reform and Opening up in China: An Analysis Based on a Vector Error Correction Model," Land, MDPI, vol. 8(10), pages 1-31, October.
    2. Riandy Laksono & Arianto A. Patunru, 2024. "The dynamics of labor share decline in manufacturing: Evidence from Indonesia," Departmental Working Papers 2024-3, The Australian National University, Arndt-Corden Department of Economics.
    3. Song, Eunbi, 2021. "What drives labor share change? Evidence from Korean industries," Economic Modelling, Elsevier, vol. 94(C), pages 370-385.
    4. Yuangang Li & Maohua Sun & Guanghui Yuan & Qi Zhou & Jinyue Liu, 2019. "Study on Development Sustainability of Atmospheric Environment in Northeast China by Rough Set and Entropy Weight Method," Sustainability, MDPI, vol. 11(14), pages 1-22, July.
    5. Lin, Boqiang & Wei, Kai, 2024. "Does investor attitude toward carbon neutrality affect stock returns in China?," International Review of Financial Analysis, Elsevier, vol. 93(C).
    6. Xu, Tao & Zhu, Weiwei, 2021. "Eudemonia and Freedom: A Bibliometric Research on Frontiers and Evolution of Labour and Employment in China," MPRA Paper 112908, University Library of Munich, Germany, revised 30 Mar 2022.

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    More about this item

    Keywords

    Global labor share; Labor migration; Dual economy;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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