How have Labour Market Developments Affected Labour Costs in China?

In this paper, we study how labour market developments have affected labour costs in China. We find labour market tightness, and hence labour migration, have some impact on the labour costs of HMT firms and private enterprises, but the overall impact is limited. It appears there is no absolute shortage of labour, but there is skill and education mismatch in labour market. As such, it is necessary to remove the barriers to labour migration, and upgrade production chains to reduce labour market distortion.