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Dynamic labor demand in China: public and private objectives

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  • Russell Cooper
  • Guan Gong
  • Ping Yan

Abstract

type="main"> This article studies dynamic labor demand by private and public manufacturing plants in China. The analysis uncovers the objectives of public and private enterprises and estimates labor adjustment costs by ownership. Public plants maximize the discounted present value of profits without a soft budget constraint. There is strong evidence of quadratic and linear firing costs at the plant level. The higher quadratic adjustment costs of the public plants may reflect their internalization of social costs of employment adjustment. Domestic private plants and collective plants have about the same discount factor, much lower than state-controlled plants.

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  • Russell Cooper & Guan Gong & Ping Yan, 2015. "Dynamic labor demand in China: public and private objectives," RAND Journal of Economics, RAND Corporation, vol. 46(3), pages 577-610, September.
  • Handle: RePEc:bla:randje:v:46:y:2015:i:3:p:577-610
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    File URL: http://hdl.handle.net/10.1111/1756-2171.12098
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    1. Cooper, Russell & Haltiwanger, John & Willis, Jonathan L., 2015. "Dynamics of labor demand: Evidence from plant-level observations and aggregate implications," Research in Economics, Elsevier, vol. 69(1), pages 37-50.
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    Cited by:

    1. Liu, Jing & Cao, Shutao, 2011. "Productivity growth and ownership change in China: 1998-2007," MPRA Paper 34601, University Library of Munich, Germany, revised 04 Sep 2011.
    2. Shuaizhang Feng & Naijia Guo, 2019. "Labor Market Dynamics in Urban China and the Role of the State Sector," Working Papers 2019-008, Human Capital and Economic Opportunity Working Group.
    3. Guiying Laura Wu, 2015. "Investment Frictions and the Aggregate Output Loss in China," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(3), pages 437-465, June.
    4. Daniel Berkowitz, 2016. "Capital-Labor Substitution, Institutions and Labor Shares," Working Paper 5981, Department of Economics, University of Pittsburgh.
    5. Daniel Berkowitz, 2020. "Declining Market Competition in China," Working Paper 6897, Department of Economics, University of Pittsburgh.
    6. Daniel Berkowitz, 2018. "Market Distortions and Labor Share Distributions: Evidence from Chinese Manufacturing Firms," Working Paper 6466, Department of Economics, University of Pittsburgh.
    7. Tang, Le, 2021. "Investment dynamics and capital distortion: State and non-state firms in China," Journal of Asian Economics, Elsevier, vol. 73(C).
    8. Daniel Berkowitz, 2016. "Recasting the Iron Rice Bowl: The Reform of China's State Owned Enterprises," Working Paper 5858, Department of Economics, University of Pittsburgh.
    9. Feng, Shuaizhang & Guo, Naijia, 2019. "Labor Market Dynamics in Urban China and the Role of the State Sector," IZA Discussion Papers 12170, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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