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The Effects of the Labor Contract Law on the Chinese Labor Market

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  • Fan Cui
  • Ying Ge
  • Fengchun Jing

Abstract

This article uses a micro‐level data set to investigate the effect of China's Labor Contract Law, implemented in 2008, on the Chinese labor market. Our empirical evidence shows that the labor law reform significantly improved employee benefit. This effect is greater for state‐owned enterprises, for large and domestic firms, and for regions with high unionization and high skill intensity. The Labor Contract Law significantly reduces the wage elasticity of labor demand, especially in highly unionized and skill‐intensive industries. However, this effect is less significant in globalized industries and female‐employee‐intensive industries. Overall, our results emphasize the important role of China's Labor Contract Law in improving employment protection, and substantial variations in the impact of labor law reform across different firms, regions, and industries.

Suggested Citation

  • Fan Cui & Ying Ge & Fengchun Jing, 2013. "The Effects of the Labor Contract Law on the Chinese Labor Market," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 10(3), pages 462-483, September.
    • Handle: RePEc:wly:empleg:v:10:y:2013:i:3:p:462-483
    DOI: 10.1111/jels.12016
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    3. Simon Deakin & Shelley Marshall & Sanjay Pinto, 2020. "Labour Laws, Informality, and Development: Comparing India and China," Working Papers wp518, Centre for Business Research, University of Cambridge.
    4. Li, Jianqiang & Shan, Yaowen & Tian, Gary & Hao, Xiangchao, 2020. "Labor cost, government intervention, and corporate innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 64(C).
    5. Yang Liuyi & Zhu Yunchan & Ren Feirong, 2023. "Does government investment push up manufacturing labor costs? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    6. Kong, Dongmin & Wang, Yanan & Zhang, Jian, 2020. "Efficiency wages as gift exchange: Evidence from corporate innovation in China," Journal of Corporate Finance, Elsevier, vol. 65(C).
    7. Ji Li, 2015. "The Leviathan's Rule by Law," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 12(4), pages 815-846, December.
    8. Xu Wang & Chris King-Chi Chan & Linchuan Yang, 2022. "Do workers benefit from economic upgrading in the Pearl River Delta, China?," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-12, December.
    9. Li, Bin & Zhao, Qizi & Shahab, Yasir & Kumar, Satish, 2023. "High-speed rail construction and labor investment efficiency: Evidence from an emerging market," Research in International Business and Finance, Elsevier, vol. 64(C).

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