Study On The Relationship Between Wage And Labor Productivity Of Guangdong Manufacturing

Labor cost advantage is an important reason why Guangdong manufacturing booms. Labor cost advantage can be measured by unit labor cost which is the ratio of wage and labor productivity. The change of unit labor cost reflects the change of the relationship between wage and labor productivity. From 2000 to 2012, the unit labor cost of Guangdong manufacturing rose by a large scale, which indicates that the relationship between wage and labor productivity also changed. This paper tries to figure out the change of the relationship between Guangdong manufacturing wage and labor productivity and the reason for it.Based on a theory model which is developed by adding price, exchange rate and lagged wage to the neoclassical wage theory, the paper chooses 27 segment manufacturing industries’panel data to make the empirical study. Preliminary analysis finds out the growth rate of wage exceeds that of labor productivity, which indicates the rise of unit labor cost and the decline of labor cost advantage. Future econometric analysis reveals that the change is because labor productivity has but very little impacts on wage and that price level, interchange rate and lagged wage have great impacts on wage.At last, the article puts up some suggestions. First of all, Guangdong should speed up the transformation and updating of the manufacturing industry and develop advanced and high-tech manufacturing. Secondly, the government should endeavor to remove barriers between the dual labor markets in order to form a unified labor market and promote free labor flows. Finally, the internal devaluation and external appreciation of RMB is an important reason for the wage rise of Guangdong manufacturing. China should gradually let go or me excnange control ana promote excnange rate rerorm.