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Forecasting Labor Supply in Urban China: Integrating Demographic Dynamics and Socioeconomic Transition

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  • Y. Xu
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    Abstract

    China's urban labor market has been under growing pressure to meet the large job demands that are resulting from the Economic System Reform. For more than three decades during the Centrally Planned System, Chinese urban citizens have been guaranteed jobs by the government. Now, the crisis in the labor market might be the source of social unrest. Balancing the urban labor supply and demand has been considered not only an economic issue but also a political challenge. Therefore, a high quality forecast that aims at telling the labor supply dynamic is much needed. By integrating demographic and socioeconomic factors into one forecast model, this research examines the labor force development in urban China to the year 2020. The research shows that in the following 20 years, China's urban labor supply tends to grow at the rate of 2% per year. The development of the labor force tends to be most sensitive to the movement of three factors, namely, urbanization, expansion in higher education and the establishment of a National Social Security System. Fertility and mortality would only make a small impact on the future urban labor market. Urbanization is likely to be the major factor responsible for increasing the number in the urban labor force. The growth in higher education, which can delay the time that young people enter the labor market, could function as a buffer to reduce the tension in the labor market and, at the same time, improve labor quality. The forecast also shows that the income reform and the forthcoming National Social Security System appear crucial to the female labor supply dynamic. They make it possible to change the family labor supply division and thus alter female labor force participation from the plateau pattern to the M-pattern.

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    Bibliographic Info

    Paper provided by International Institute for Applied Systems Analysis in its series Working Papers with number ir00011.

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    Date of creation: Feb 2000
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    Handle: RePEc:wop:iasawp:ir00011

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    1. H.M. Yousif & A. Goujon & W. Lutz, 1996. "Future Population and Education Trends in the Countries of North Africa," Working Papers rr96011, International Institute for Applied Systems Analysis.
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    Cited by:
    1. David Dollar & Benjamin F. Jones, 2013. "China: An Institutional View of an Unusual Macroeconomy," NBER Working Papers 19662, National Bureau of Economic Research, Inc.
    2. Krug, B. & Hendrischke, H., 2006. "Institution Building and Change in China," ERIM Report Series Research in Management ERS-2006-008-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.

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