Competitive Pressure on China

Factor Rewards Migration

T. Ten Raa, H. Pan

Research output: Working paperDiscussion paperOther research output

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Abstract

Our objective is to assess personal income under perfect competition, when factors are rewarded according to their productivities, and to contrast the ensuing distribution with the status quo.Competition will yield winners and losers, both in terms of factor claims and in terms of regions or provinces. Income differences will press people to migrate.To analyze this, we divide China into 30 input-output sectors and 27 provinces; we maximize domestic final demand, while preserving its proportions in each province, subject to material balances and factor constraints.The shadow prices to the constraints represent competitive commodity prices and factor rewards.Unskilled labor would stand to lose and, therefore, inequality would mount.The pressure on interprovincial migration would be enormous with 10 to 20% of the people on the road.The flipside is the great potential for improvement of the average standard of living.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages25
Volume2001-52
Publication statusPublished - 2001

Publication series

NameCentER Discussion Paper
Volume2001-52

Fingerprint

China
Reward
Factors
Standard of living
Unskilled labour
Shadow price
Material balance
Productivity
Personal income
Income differences
Roads
Commodity prices
Proportion
Perfect competition
Status quo

Keywords

  • competition
  • income distribution
  • migration

Cite this

Ten Raa, T., & Pan, H. (2001). Competitive Pressure on China: Factor Rewards Migration. (CentER Discussion Paper; Vol. 2001-52). Tilburg: Macroeconomics.
Ten Raa, T. ; Pan, H. / Competitive Pressure on China : Factor Rewards Migration. Tilburg : Macroeconomics, 2001. (CentER Discussion Paper).
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Ten Raa, T & Pan, H 2001 'Competitive Pressure on China: Factor Rewards Migration' CentER Discussion Paper, vol. 2001-52, Macroeconomics, Tilburg.

Competitive Pressure on China : Factor Rewards Migration. / Ten Raa, T.; Pan, H.

Tilburg : Macroeconomics, 2001. (CentER Discussion Paper; Vol. 2001-52).

Research output: Working paperDiscussion paperOther research output

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N2 - Our objective is to assess personal income under perfect competition, when factors are rewarded according to their productivities, and to contrast the ensuing distribution with the status quo.Competition will yield winners and losers, both in terms of factor claims and in terms of regions or provinces. Income differences will press people to migrate.To analyze this, we divide China into 30 input-output sectors and 27 provinces; we maximize domestic final demand, while preserving its proportions in each province, subject to material balances and factor constraints.The shadow prices to the constraints represent competitive commodity prices and factor rewards.Unskilled labor would stand to lose and, therefore, inequality would mount.The pressure on interprovincial migration would be enormous with 10 to 20% of the people on the road.The flipside is the great potential for improvement of the average standard of living.

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Ten Raa T, Pan H. Competitive Pressure on China: Factor Rewards Migration. Tilburg: Macroeconomics. 2001. (CentER Discussion Paper).