Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?
IMF Working Papers, January 29, 2013
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Bibliographic details
- Authors: Mitali Das, Papa M N'Diaye
- Published: January 29, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475548242.001
Key findings and central result
- On current trends, the Lewis Turning Point will emerge between 2020 and 2025.
- China’s working age population will reach a historical peak within a few years and then begin a precipitous decline.
- Rapidly rising migrant wages and episodic labor shortages have raised questions about whether China is poised to cross the Lewis Turning Point, defined as the move from a vast supply of low-cost workers to a labor shortage economy.
- Demographics will be the dominant force driving the depletion of surplus labor.
Alternative scenarios and their effects
- Higher fertility: may peripherally delay the onset of the Lewis Turning Point.
- Greater labor participation rates: may peripherally delay the onset.
- Financial reform: may peripherally delay or accelerate the onset.
- Higher productivity: may peripherally delay or accelerate the onset.
- Note: alternative scenarios can only peripherally influence timing; they do not overturn the dominant demographic trajectory.
Implications
- Crossing the Lewis Turning Point will have far-reaching implications for both China and the rest of the world.
- Transitioning from abundant low-cost labor to a labor shortage economy affects wages, labor market tightness, and production dynamics.
Research scope and topics covered
- Labor, Labor demand, Labor markets, Labor supply, Production, Total factor productivity, Wages.
- Keywords used in the study include: demand condition, Demographics, Excess labor supply, excess supply of labor, fertility rate, Global, growth model, growth rate, Labor demand, labor market, labor market development, labor market tightness, Labor markets, labor shortage economy, Labor supply, Lewis Turning Point, Population aging, surplus labor, TFP contribution, Total factor productivity, unemployment results from labor market friction, Wages, WP.
By Mitali Das and Papa M N'Diaye; January 29, 2013. IMF Working Paper No. 2013/026; Pages: 21; Volume: 2013; Issue: 026; DOI: https://doi.org/10.5089/9781475548242.001; Stock No: WPIEA2013026; ISBN: 9781475548242; ISSN: 1018-5941.