Wage and price dynamics in a large emerging economy: the case of China

Published as: "Wage and price dynamics in China" (with C Holz), The World Economy, vol 39, no 8, 2016, pp 1109-27.

This study finds that the growth in labour costs in China is not passed through fully to final prices in China, neither in the tradable goods sector nor in the economy as a whole. This probably reflects the strong pressure on profit margins from a highly competitive environment, especially in manufactured goods. The potential implications of labour cost increases in China for global inflation pressures are also discussed.

Keywords: Labour costs, inflation, China, global economic slack, globalisation

JELclassification: E31, F42, J30