2013年-IMF国际货币组织全球_Chronicle_of_a_Decline_Foretold_Has_China_Reached_the_Lewis_Turning_Point__21页_1mb

Summary of "Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?"

Core Content

This working paper by Mitali Das and Papa N'Diaye analyzes whether China has reached the Lewis Turning Point (LTP), a critical demographic and economic threshold where the supply of surplus labor begins to decline, leading to a shift from an extensive growth model to a more intensive one. The paper uses an empirical framework to estimate the dynamics of China's labor market and project the timing of the LTP.

Main Viewpoints

• China's labor market has been a key driver of its economic growth, characterized by a large surplus of rural labor.
• The Lewis model suggests that as surplus labor is exhausted, wage increases in the industrial sector will outpace productivity gains, leading to a labor shortage and a shift in the growth model.
• Demographic trends, including declining fertility and an aging population, are expected to significantly reduce the working-age population by 2020, signaling the approach of the LTP.
• The paper estimates that under current trends, China will cross the LTP between 2020 and 2025, when surplus labor turns negative.
• While wage increases and labor shortages have been observed, they may not yet indicate the exhaustion of surplus labor, as productivity growth continues to outpace wage growth.

Key Information

Demographic Trends

• China's working-age population (15-64 years) is projected to peak around 2020 and then decline.
• The dependency ratio (share of dependents in the population) is expected to rise from its 2010 trough, indicating an aging population and reduced labor availability.
• The core 20-39 age group—which is the most productive—has already stopped growing, with a projected decline in the future.

Labor Market Developments

• Nominal wage growth has remained high (12–15% annually) for over a decade, but productivity growth has outpaced it.
• Urban unemployment and migrant labor shortages have been reported, but wage increases are attributed to labor market frictions, not scarcity.
• Rural labor still constitutes a large share of the workforce, and productivity improvements in agriculture could free up more workers for industrial sectors.

Empirical Framework

• The paper uses a disequilibrium model to estimate labor supply and demand, distinguishing between excess supply and excess demand.
• The excess labor supply is modeled as the difference between the notional supply and demand of labor.
• The model incorporates real wages, total factor productivity (TFP), trading partner GDP growth, net household wealth, and unemployment rate as key variables.
• The estimated coefficient on the excess supply indicator variable, $\delta$, is statistically significant, supporting the disequilibrium framework over the equilibrium model.

Baseline Scenario Results

• Under the baseline assumptions, the excess labor supply peaks in 2010 at 151 million.
• It is projected to decline sharply to 57 million in 2015, 33 million in 2020, and turn negative by 2025.
• The LTP is expected to occur between 2020 and 2025, marking the shift to a labor shortage economy.
• The decline in surplus labor closely follows the projected rise in the dependency ratio, which is expected to increase rapidly after 2010.

Scenario Analysis

• Higher fertility rate (e.g., relaxation of the one-child policy) would delay the LTP by increasing the working-age population.
• The impact is modest, with surplus labor rising from 33 million to 36 million in 2020 and declining to -16 million in 2025.
• Higher labor force participation rates could also delay the LTP, but the effect is limited.
• Financial sector reform and product market reform may have peripheral effects on the timing of the LTP.
• The paper suggests that demographics will be the dominant factor in determining the LTP, with other factors playing a supporting role.

Conclusion

• The paper concludes that China is on the eve of the LTP, but the exact timing is uncertain.
• Demographics are the primary driver of the decline in surplus labor, with wage increases and labor shortages indicating a transition to a labor shortage economy.
• The government's policy goals—such as rebalancing growth, increasing TFP, and reducing reliance on factor input accumulation—are likely to be more relevant as the LTP is approached.
• The implications of the LTP include a shift from extensive to intensive growth, which would affect China's economic structure and have global spillovers, particularly in emerging Asia and commodity exporters.

Key Variables and Data Sources

References and Appendices

• The paper references Sir Arthur Lewis' model and empirical studies by Lucas and Rapping (1969), Barro and Grossman (1971), Quandt and Rosen (1978, 1986), and Rudebusch (1986).
• An appendix provides the derivation of the empirical framework, including the model equations and assumptions.
• The results are presented in Table 2, with Figure 4 showing the projected surplus labor under the baseline scenario.