The Influence Of Labor Costs Elevation To The International Competitiveness Of China’s Trading

This paper in background of labor cost elevation in China, investigates how thecompetitiveness of China’s industry changed in recent years, and explore the impact oflabor cost elevation from two aspects. In one aspect, discusses the status of China’s labormarket in scope of macroeconomics. The internal labor market theory, labor marketsegmentation theory and wage theory are presented in the first part. Then analysis theelements that affect labor cost, integrating the specificity of China. By comparing thegrowth rate between labor productivity and the labor cost, and analyzing the impact ofinstitutional factors, it is shown that China’s labor productivity growth rate is faster thanlabor cost, so the relative labor cost is lower than before,but the traditional system of labormarket limit the free movement of labor.Following the above, this paper discussing how the international competitiveness ofChina’s industry changed in recent years. The trade competitiveness index is used tomeasuring industry’s competitiveness. An empirical methodology is used to tests thecorrelation of labor cost and the index. The empirical results show that only in agricultureraising labor costs has a negative impact on the competitiveness, and in other industryeither labor cost effect obvious nor effect positive. So generally speaking increasing thewages of workers didn’t weaken the competitiveness of China’s industry.