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The effect of job displacement on labor market outcomes: Evidence from the Chinese state-owned enterprise reform

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  • Tian, Xinping
  • Gong, Jinquan
  • Zhai, Zhe

Abstract

We estimate the long-term costs of job displacement for individuals who lost their jobs during the dramatic reform of state-owned enterprises (SOEs) in the late 1990s in China, using data from the China Health and Nutrition Survey. We find that the workers displaced during the SOE reform suffered substantial and persistent earnings losses. In addition, by comparing wage losses and reductions in employment and work hours over time, we find that the majority of long-term earnings losses were driven by declines in post-displacement wages. Moreover, we find that the displaced workers tended to find reemployment in low-skilled occupations, in the private sector, with less profitable employers, and through informal contracts, which may explain the substantial costs of displacement.

Suggested Citation

  • Tian, Xinping & Gong, Jinquan & Zhai, Zhe, 2022. "The effect of job displacement on labor market outcomes: Evidence from the Chinese state-owned enterprise reform," China Economic Review, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:chieco:v:72:y:2022:i:c:s1043951x22000013
    DOI: 10.1016/j.chieco.2022.101743
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    Cited by:

    1. Chen, Ming & Chen, Chen, 2023. "Financial constraints alleviation: Why does state-owned share reduction in China promote firm performance?," Finance Research Letters, Elsevier, vol. 55(PA).

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    More about this item

    Keywords

    Costs of job displacement; State-owned enterprise reform; Mass layoffs; China;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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