NATIONAL BUREAU OF ECONOMIC RESEARCH
Institute of World Economics & Politics
Chinese Academy of Social Sciences
Beijing, China 100732
NBER Working Papers and Publications
|November 2011||Ownership Characteristics, Real Exchange Rate Movements and Labor Market Adjustment in China|
with John Whalley: w17565
This paper uses a firm level multi-industry data set covering 456 Chinese manufacturing sectors to assess the implications of Renminbi (RMB) real exchange rate appreciation for adjustments in employment and wage rates. We stress differences in both industry and firm characteristics within sectors. Our empirical results show that modest (and also larger) RMB real exchange rate appreciation would likely have pronounced effects on both net employment and wage rates. A 10% RMB appreciation would likely cause a net employment decline in Chinese manufacturing industries of between 4.1% and 5.3%, and a wage rate drop of 4% after controlling for other factors. Real exchange rate change effects by industry on net employment and wage rates vary significantly with the ownership characteristics of fir...