Dynamique des salaires et globalisation en Chine – DSGC

Our project addresses the issue of the evolution of labour markets and wage inequality in China in a context of greater globalisation. This issue has crucial implications for the Chinese economy as well as for the world economy. Whether economic growth induces a rise in wage rates or not will determine the growth strategy of the Chinese economy. A sustainable export-led growth in China may result in a multiplication of trade conflicts with its partners and may induce a risk of long-lasting downward adjustment of unskilled labour wages nationally and internationally. On the opposite, an alternative scenario would put the emphasis on domestic market and the rise in domestic purchasing power, most likely to the benefit of international suppliers. This topic is crucial as it relates not only to the future equilibrium of world markets but also to the domestic prospects of Chinese economy and to the sustainability of economic reforms. This topic fits well in the traditional areas of research of the laboratories TEAM and EUREQUA within the Centre d'Economie de la Sorbonne, that are international trade, development economics economic geography and localisation. Its originality comes from the combination of two dimensions: international with the study of the impact of globalization on wages in China and domestic with the analysis of the forces at play during the transition process in China. A further important aspect is the country that this proposal aims at studying. Research in China has enormous potential. However, very little research in conducted in France to understand the specificity and potential impact of Chinese economy. This project intends first, to bring together a team of young researchers in a French institution dedicated to the analysis of the dynamics of Chinese economy and second, to gather various datasets at the macro and micro level in order to lay the foundations of future research. Our project aims at providing a broader overview on the forces at stake in the Chinese labour market and at investigating the interaction between wage rates and globalisation inside the country. It will rely on various micro and macro databases in order to shed light on the determination process of wage (both in terms of evolution and differentials) and to evaluate how much of observed wage gaps can be attributed to differences in productivity, technology, openness or pure segmentation phenomena. Doing so, we intend to shed some light on the structure of the Chinese labour market after 25 years of reforms, on the extent to which the labour market had become market forces-driven and on the most likely evolution of Chinese wages level and structure. The Chinese case is interesting for several reasons. First, income inequality, that has always been an important and sensitive political question in China, has worsened since the 1990s after two decades of relative stability and even reduction (Kanbur and Zhang, 2005 ). Second, the increasing income inequality in China after its trade liberalisation in the late 1970s has coincided with the international trend towards an increasing wage gap between high and low skilled workers. Explanations raised by the literature to the increasing wage inequality observed in many industrialised countries and Mexico (Feenstra and Hanson, 2001 ) during the last two decades, include international competition from low wage countries, skilled biased technological change due to the increased use of computers as well as global outsourcing (Borjas and Ramey, 1995; Wood, 1994; Berman, Bound, and Griliches, 1994; Feenstra and Hanson, 1999 ). China, the largest developing country in the world, underwent economic reform in the late 1970s and actively engaged both in technological upgrading and in global outsourcing. Our research intends to investigate the respective importance of those various phenomena as explanation of rising wage inequality. We will examine wage differences according to two complementary dime