Labor Costs, Research, And The Rmb Exchange Rate Issue

Focusing on labor cost,this thesis discusses the general relationship between RMB appreciation and labor cost evolution.In this paper,the starting point is a comprehensive analysis of relationship between labor costs(wages) and the exchange rate.Step 1:entry point - the establishment of relationship between labor costs(wages) and the exchange rate.According to Professor Jiang Boke "new framework",we start with a simple E-P model to draw a conclusion:under generally abstract circumstances, price increases can ease the pressure on the exchange rate appreciation.And then we reveal the special nature of labor costs to establish the general relationship between labor costs and exchange rate.The inflation driven by wage-rising will ease the appreciation pressure.Finally,we use an empirical method to clarify this relationship. Step 2:Expanding - complete analysis of the relationship.First,we use of Balassa·Samuelson framework to add effective division between tradable and non-tradable sectors.We modify some assumptions according to China's reality and come to a conclusion:we should maintain the synchronization mechanism between the growth in wages and labor productivity.We take dynamic factors into account.Step 3: Management - the policy application.We give some suggestion on appreciation method,labor markets and enterprises.Finally,conclusions are drawn as following:as to an underdeveloped economy like China,RMB appreciation is a process of wealth redistribution,within which the appreciation pressure should be released by price inflation driven by labor cost.Under the cost-sharing and benefit-sharing principle,we should promote the rational, comprehensive increase in labor wage.Therefore,RMB inflation is not a passive choice under foreign pressure but an independent choice for its own more healthy and orderly future.