Class Power and China’s Productivity Miracle: Applying the Labor Extraction Model to China’s Industrial Sector, 1980-2007

TitleClass Power and China’s Productivity Miracle: Applying the Labor Extraction Model to China’s Industrial Sector, 1980-2007
Publication TypeJournal Article
Year of Publication2014
AuthorsPiovani, Chiara
JournalReview of Radical Political Economics
Volume46
Issue3
Pagination331 - 354
Date Published2014
KeywordsChina, productivity, time-series, wage share
Abstract

This paper aims to assess the relationship between industrial productivity and industrial wage share in China between 1980 and 2007, and to identify the determinants of the industrial wage share over the same period. The results suggest that the market reforms in China have led to a reduction of workers’ bargaining power, which in turn explains both the rapid productivity increase and the steady decline in the wage share observed since the beginning of the reforms. The results also suggest that privatization, labor market informalization, and retreat of the state from social provisioning are key factors explaining the decline in the wage share. The current Chinese model of development, however, is unsustainable for economic, social, and environmental reasons, and a sustainable model of development is likely to require a more egalitarian income distribution.