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China's State-Owned Enterprises in the First Reform Decade: An Analysis of a Declining Monopsony

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  • Dong, Xiao-Yuan
  • Putterman, Louis

Abstract

We study the evolution of employment and wage outcomes in Chinese SOEs during the first decade of economic reforms, using a panel of data for almost 1000 enterprises covering the years 1980-90. Unlike the 1990s, which were marked by growing labor redundancy in the SOE sector, we find that CPE-fostered capital-intensity remained so extreme during the 1980s that workers' marginal products exceeded their full wages, just as in a classical monopsony outcome. Consistent with reasoning about the impact of competition upon monopsony, however, we find the marginal product-wage gap declined in the face of market-oriented reforms, and that monopsony was weakest where the state sector's shares of industrial output and enterprises were lowest, and for smaller enterprises and enterprises managed by lower levels of government. Our analysis also supports Xu and Zhuang's (1996) finding that bonus payments increased enterprises' revenues by more than it did their costs. Copyright 2002 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Economics of Planning.

Volume (Year): 35 (2002)
Issue (Month): 2 ()
Pages: 109-39

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Handle: RePEc:kap:ecopln:v:35:y:2002:i:2:p:109-39

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Web page: http://www.springerlink.com/link.asp?id=113294

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Cited by:
  1. Fleisher, Belton M. & Wang, Xiaojun, 2003. "Potential residual and relative wages in Chinese township and village enterprises," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 429-443, September.
  2. Dong, Xiao-Yuan, 2005. "Wage inequality and between-firm wage dispersion in the 1990s: A comparison of rural and urban enterprises in China," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 664-687, December.
  3. Fleisher, Belton M. & Wang, Xiaojun, 2004. "Skill differentials, return to schooling, and market segmentation in a transition economy: the case of Mainland China," Journal of Development Economics, Elsevier, vol. 73(1), pages 315-328, February.

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