How are wages set in Beijing?

That is the question asked by José de Sousa and Sandra Poncet from the Université Paris 1, in a new working paper. Drawing on a sample of 29 Chinese provinces between 1995 and 2002, How are wages set in Beijing? (PDF) finds that most of the variance in the average regional wage rate is due to differences in access to markets and to immigrant labor.

Both market access and migration have statistically significant effects on the wage level. The magnitude of the immigrant labor access offsets the impact of market access and exerts a downward pressure on wages.

Comments

[Lafayette]

Frankly, what can one expect from a non-unionized country?

Wages are poor, working conditions abysmal ... but both are nonetheless better than starving to death back home in some country village.

A Chinese real estate entrepreneur recently opened a private gated estate just outside of Peking, aptly named "Fortune Estates". All 50 or so houses (well above 250 square meters each) were snapped up in the first few weeks at more than 600,000€.

For all its poverty, China is beginning to emulate the American phenomenon whereby the filthy rich rush to distinguish themselves from the simply rich.

Next stop (supposedly)? Buying one's own Summer Chateau in France. (I can hardly wait for them .... ; ^)

[Arthur Eckart]

Also, it may depend on how output is measured and the product or skill level. If a haircut in China is 10% the price in the U.S., then Purchasing Power Parity (PPP) may overstate China's income or output in that industry by 10 times compared to income or output in a developed country. Haircuts may be a relatively high skilled job in China and a larger population of unskilled labor may drive up wages.

[Beijing Danny]

Wages compared in simple numerical terms ignore the fact that 1 dollar can buy 10 times more in China. If you look at quality of life, then in many ways China already surpasses the west.

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