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Wages,Export Trade and Total Factor Productivity:From 1979 to 2009

Zhang Qing-chang

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Abstract

This paper calculates provincial total factor productivity from 1979 to 2009 by DEA.It finds that the growth of TFP deviates from the growth of wages in China,which contradicts the study of Madsen and Damania in 2001.Therefore,with the actual situation in China,this paper theoretically analyzes this issue from the angle of demandled innovation.Then it makes empirical study after the control of the possible effects of TFP on wages by twostep system GMM.The results show that,from 1979 to 1997,the growth of wages is consistent with the growth of TFP and wages and exports have significantly positive effects on TFP.From 1998 to 2009,the growth of TFP deviates from the growth of wages mainly owing to a large increase in our exports which offsets the pressure of increasing wages and weakens the innovational motivation of firms.

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What this paper is about

This paper calculates provincial total factor productivity from 1979 to 2009 by DEA.It finds that the growth of TFP deviates from the growth of wages in China,which contradicts the study of Madsen and Damania in 2001.Therefore,with the actual situation in China,this paper theoretically analyzes this issue from the angle of demandled innovation.Then it makes empirical study after the control of the possible effects of TFP on wages by twostep system GMM.The results show that,from 1979 to 1997,the growth of wages is consistent with the growth of TFP and wages and exports have significantly positive effects on TFP.From 1998 to 2009,the growth of TFP deviates from the growth of wages mainly owing to a large increase in our exports which offsets the pressure of increasing wages and weakens the innovational motivation of firms.

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Available abstract

This paper calculates provincial total factor productivity from 1979 to 2009 by DEA.It finds that the growth of TFP deviates from the growth of wages in China,which contradicts the study of Madsen and Damania in 2001.Therefore,with the actual situation in China,this paper theoretically analyzes this issue from the angle of demandled innovation.Then it makes empirical study after the control of the possible effects of TFP on wages by twostep system GMM.The results show that,from 1979 to 1997,the growth of wages is consistent with the growth of TFP and wages and exports have significantly positive effects on TFP.From 1998 to 2009,the growth of TFP deviates from the growth of wages mainly owing to a large increase in our exports which offsets the pressure of increasing wages and weakens the innovational motivation of firms.

Key concepts: Total factor productivity, Economics, Real wages, Productivity, China, Labour economics, Wage, Macroeconomics

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