The Effects of Wage Distortions on the Transition: Theory and Evidence from China
AbstractBefore the reforms, the Chinese government had strong distributional objectives, which it pursued mainly by direct controls over state enterprise wage rates and hiring decisions. During the reform period, similar controls over state enterprises continued, but use of them had to re ect competition with the new nonstate sector that was mostly free from these controls. Based on these distributional considerations alone, we can explain: 1) a decline in the skills of workers in the state sector as the most able workers leave, 2) higher productivity in the nonstate sector, which consists of the most able workers, 3) accounting losses in the state sector, re ecting the transfer of tax revenue to nance higher wage payments to the unskilled, and 4) restructuring within the state sector, to reduce the distortions to relative wage rates. Many of these attributes are shared with other types of transition process.
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Bibliographic InfoPaper provided by Michigan - Center for Research on Economic & Social Theory in its series Papers with number 97-04.
Length: 27 pages
Date of creation: 1997
Date of revision:
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Postal: UNIVERSITY OF MICHIGAN, DEPARTMENT OF ECONOMICS CENTER FOR RESEARCH ON ECONOMIC AND SOCIAL THEORY, ANN ARBOR MICHIGAN U.S.A.
PUBLIC SECTOR ; ECONOMIC REFORM ; WAGES ; LABOUR MARKET ; PRODUCTIVITY;
Other versions of this item:
- Gordon, Roger H. & Li, David D., 1999. "The effects of wage distortions on the transition:: Theory and evidence from China," European Economic Review, Elsevier, vol. 43(1), pages 163-183, January.
- H10 - Public Economics - - Structure and Scope of Government - - - General
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
- P50 - Economic Systems - - Comparative Economic Systems - - - General
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