Could There Be a Shortage of Chinese Workers?
Incredibly Keith Bradsher thinks so:
A prime reason India is now developing into the world’s next big industrial power is that a number of global manufacturers are already looking ahead to a serious demographic squeeze facing China. Because of China’s “one child” policy, family sizes have been shrinking there since the 1980’s, so fewer young people will be available soon for factory labor.
Which draws some fire from Dean Baker:
China’s supply of manufacturing workers will not be limited by its population anytime soon for the simple reason that close to half of its work force is still in agriculture. So, there is not any imminent shortage of manufacturing workers in China. Now, there is a separate point. There is some evidence (noted in the article) that wages are rising in China. This is not a “demographic squeeze,” this is the desired result of economic growth. Chinese workers, like New York Times reporters, would like better living standards. The fact that workers might be experiencing rising living standards is good news for China – the opposite of a problem.
Simply put – higher wages are the result of an outward shift of the demand curve and not some alleged inward shift of the supply curve. Could we reasonably expect those writing on economic issues for the New York Times to understand this basic concept?
Update: AB reader YC points us to Yuan Yao:
The green paper report on population and labor by the Chinese Academy of Social Sciences (CASS) showed that after 2016, the aging population is set to increase dramatically, and the size of the labor force will drop accordingly. Economists said if this situation becomes a reality China’s cheap labor advantage may disappear. Actually the problem has already emerged in China’s most development areas including the Yangtze River Delta and the Pearl River delta, where the labor supply could not meet the demand in years. Indeed China’s economic growth has mainly relied on its ample supply of labor. It is the labor intensive manufacturing and processing industries that have given China such an advantage in the world economy. Without sufficient labor supply, these industries will collapse.
This post is clearing talking about a current outward shift of the demand with a potential future inward shift of available supply in certain regions. While I still think Dean Baker has a point about the latter, AB readers K Harris and KNZN frame this nicely in terms of elasticity of supply and possible heterogeneity of workers – with part of this coming from they live in relationship to where the jobs are.