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China's 2008 Labor Contract Law: Implementation and Implications for China's Workers

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Author Info

  • Gallagher, Mary

    ()
    (University of Michigan)

  • Giles, John T.

    ()
    (World Bank)

  • Park, Albert

    ()
    (Hong Kong University of Science & Technology)

  • Wang, Meiyan

    ()
    (Chinese Academy of Social Sciences)

Abstract

This paper presents empirical evidence from household and firm survey data collected during 2009-2010 on the implementation of the 2008 Labor Contract Law and its effects on China's workers. The government and local labor bureaus have made substantial efforts to enforce the provisions of the new law, which has likely contributed to reversing a trend toward increasing informalization of the urban labor market. Enforcement of the law, however, varies substantially across cities. The paper analyzes the determinants of worker satisfaction with the enforcement of the law, the propensity of workers to have a labor contract, workers' awareness of the content of the law, and their likelihood of initiating disputes. The paper finds that all of these factors are highly correlated with the level of education, especially for migrants. Although higher labor costs may have had a negative impact on manufacturing employment growth, this has not led to an overall increase in aggregate unemployment or prevented the rapid growth of real wages. Less progress has been made in increasing social insurance coverage, although signing a labor contract is more likely to be associated with participation in social insurance programs than in the past, particularly for migrant workers.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7555.

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Length: 53 pages
Date of creation: Aug 2013
Date of revision:
Publication status: forthcoming in: Human Relations, 2013
Handle: RePEc:iza:izadps:dp7555

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Keywords: gender; social insurance; informal sector; labor regulations; migration; China;

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  1. Richard B. Freeman, 2007. "Labor Market Institutions Around the World," NBER Working Papers 13242, National Bureau of Economic Research, Inc.
  2. Michael Funke & Yu-Fu Chen, 2009. "China's new labour contract law: No harm to employment?," Quantitative Macroeconomics Working Papers 20909b, Hamburg University, Department of Economics.
  3. Amin, Mohammad, 2007. "Labor regulation and employment in India's retail stores," Policy Research Working Paper Series 4314, The World Bank.
  4. Peter R. Fallon & Robert E. B. Lucas, 1989. "Job Security Regulations and the Dynamic Demand for Industrial Labor in India and Zimbabwe," Boston University - Institute for Economic Development 2, Boston University, Institute for Economic Development.
  5. Giles, John & Wang, Dewen & Park, Albert, 2013. "Expanding social insurance coverage in urban China," Policy Research Working Paper Series 6497, The World Bank.
  6. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
  7. Ahsan, Ahmad & Pagés, Carmen, 2008. "Are All Labor Regulations Equal? Evidence from Indian Manufacturing," IZA Discussion Papers 3394, Institute for the Study of Labor (IZA).
  8. Kaplan, David S., 2009. "Job creation and labor reform in Latin America," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 91-105, March.
  9. Feldmann, Horst, 2009. "The unemployment effects of labor regulation around the world," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 76-90, March.
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