Publication: What was the Impact of Creating Better Jobs for More People in China’s Economic Transformation? What We Know and Questions for Further Investigation
Date
2021-10-26
ISSN
Published
2021-10-26
Author(s)
Merotto, Dino
Jiang, Hanchen
Abstract
The authors show that for China the
movement of more people into better jobs with higher incomes
formed a very important explanation for the country’s
long-term success in growth and poverty reduction. China’s
exporting cities created a virtuous cycle of new
wage-employment-creating investments by new businesses
making new products. The rapid increase in urban labor
demand drew hundreds of millions of workers from the rural
“traditional” sector to the “modern” sector, providing them
with more reliable waged incomes. This dramatically raised
the share of waged employment in China’s economy and
unleashed new middle-class demand for more income-elastic
goods and services. Growth in urban wages was moderated by
regulated rural to urban labor migration under the Hukou
system. This raised returns to capital, which maintained
business incentives to re-invest their profits in new goods
and services for which new markets were opening. Production
of cheaper manufactured goods for the world market was an
important catalyst, but domestic demand for services in
China has maintained the momentum.
Citation
“Merotto, Dino; Jiang, Hanchen. 2021. What was the Impact of Creating Better Jobs for More People in China’s Economic Transformation? What We Know and Questions for Further Investigation. Jobs Working Paper;No. 62. © World Bank, Washington, DC. http://hdl.handle.net/10986/36538 License: CC BY 3.0 IGO.”