The Role of Social Capital in the Labour Market in China
AbstractSocial capital is thought to play an economic role in the labour market. It may be particularly pertinent in one that is in transition from an administered to a market-oriented system. One factor that may determine success in the underdeveloped Chinese labour market is thus guanxi, the Chinese variant of social capital. With individual-level measures of social capital, we test for the role of guanxi using a data set designed for this purpose, covering 7,500 urban workers and conducted in early 2000. The basic hypothesis is supported. Both measures of social capital - size of social network and Communist Party membership - have significant and substantial effects in the income functions. Indeed, social capital may be just as important as human capital: remarkably, one additional reported contact contributes more than one additional year of education. Social capital can have influence either in an administered system or in one subject to market forces. We find that it does so in both parts of the labour market, but some of the evidence suggests that it is more important in the latter.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 121.
Date of creation: 01 Oct 2002
Date of revision:
labour markets; wages; social capital; social networks; China;
Other versions of this item:
- John Knight & Linda Yueh, 2008. "The role of social capital in the labour market in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(3), pages 389-414, 07.
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
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