China's Economy To The Lewis Turning Point?

In the past several years, labor shortage has become an emerging issue, in particular in the coastal region. However, there is a large debate on whether China has passed the Lewis turning point and entering a new era of labor shortage. Most empirical studies on this topic rest on the estimation of total labor supply and demand. Because of the poor quality of labor statistics, the debate is hardly reconciled. In this paper, we examine the evolving patterns of wage rate in harvest and slack seasons over a long period based on primary surveys in the poor region of Gansu province. The wage rate data is more accurate than employment data. Our results show a clear upward trend of real wage rate since 2003 no matter whether other factors are controlled for or not. The acceleration of real wage rate even in slack seasons in a poor region indicates that the era of surplus labor is over. This finding has important policy implications on China's future development modelReaders may ask if the data of Gansu Province are representative, and reflect that national labor shortage is coming. To answer the question, using the investigation data of CCAP of CAS from Jiangsu, Hebei, Shaanxi, Jilin, and Sichuan Provinces, the author conducts horizontal comparative study between eastern, middle, and western regions of China, proving that rural labor shortage gradually spreads from developed eastern regions to middle and western regions. Therefore, if the rural labor shortage begins to appear in poor western regions, it can adequately indicate that he age of rural labor shortage nationwide has come, thus proving the effectiveness of using poor regions in Gansu to certify rural labor shortage nationwide.