Automation and inequality in China

Yixiao Zhou, Rod Tyers*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    17 Citations (Scopus)

    Abstract

    In transitional economies, low wages imply sub-OECD yet growing labor shares of value added. China's rapid development has, however, seen a declining low-skill labor share and rising inequality. Here, a stylized model with three households and separable TFP and factor bias suggests a third of the decline in the low-skill share since 1994 is due to structural change and the rest mainly to skill-biased technical change. Expected future twists away from low-skill labor toward capital yield further inequality, moderated if strong TFP growth and population stability continue. But if the bias accompanies TFP shortfalls, worker displacement and rising inequality are in prospect.

    Original languageEnglish
    Article number101202
    JournalChina Economic Review
    Volume58
    DOIs
    Publication statusPublished - Dec 2019

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