【China Economic Journal】The challenge to china’s enterprises from increasing labor costs: the product quality perspective
Dandan Li, Ting Tang, Dezhuang Hu, Feifei Song & Lianfa Luo
Abstract: Using China Employer–Employee Survey data, this paper investigates the possible heterogeneous results of increasing labor costs of different firms. The paper finds that, unskilled labors have a higher wage growth rate than the skilled labor. Firms with higher product quality employ more skilled labor, and thus are less affected by the increasing labor costs. On the other hand, firms with higher product quality have less elastic demand, which makes it possible for them to increase their prices without demand decreasing. The conclusions are well supported by the data. Therefore, we should treat the challenge of increasing labor cost in a new way. The real challenge of increasing labor cost is greater for low-quality firms. The empirical results suggest that some of the low-quality firms should upgrade their quality to a higher level to offset their labor cost increase.
Abbreviations: CEES: China Employer-Employee Survey LP: Labor productivity LTP: Lewis turing point TFP: Total factor productivity
KEY WORDS: Labor cost, product quality, performance
JEL CLASSIFICATION: E24 D21 O15
点击下载全文
