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Industry specialization, diversification, churning, and unemployment in Chinese cities

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  • FU, Shihe
  • DONG, Xiaofang
  • CHAI, Guojun

Abstract

This paper studies how industry specialization, diversification, and churning affect unemployment rates in Chinese cities. Using a city level panel data set from 1997 to 2006, we find that in contrast to the evidence from developed countries, industry diversity is positively and significantly associated with unemployment rates, possibly due to the high degree of industry churning during the sample period. We also find that the specialization of construction industry and wholesale and retail trade industry can significantly decrease unemployment rate, but specializing in finance industry increases unemployment rate. Urban growth, market maturity measured by the proportion of private sector employment, and human capital can decrease unemployment rate. The effect of industry structure on unemployment instability is also discussed.

Suggested Citation

  • FU, Shihe & DONG, Xiaofang & CHAI, Guojun, 2010. "Industry specialization, diversification, churning, and unemployment in Chinese cities," China Economic Review, Elsevier, vol. 21(4), pages 508-520, December.
  • Handle: RePEc:eee:chieco:v:21:y:2010:i:4:p:508-520
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    References listed on IDEAS

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    Cited by:

    1. Liu, Yang, 2013. "Labor market matching and unemployment in urban China," China Economic Review, Elsevier, vol. 24(C), pages 108-128.
    2. Randall Jackson, 2015. "Are Industry Clusters and Diversity Strange Bedfellows?," The Review of Regional Studies, Southern Regional Science Association, vol. 45(2), pages 113-129, Fall.
    3. Ouyang, Puman & Fu, Shihe, 2012. "Economic growth, local industrial development and inter-regional spillovers from foreign direct investment: Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 445-460.
    4. repec:eee:quaeco:v:64:y:2017:i:c:p:1-11 is not listed on IDEAS
    5. Randall Jackson, 2015. "Fellows Address: Are Industry Clusters and Diversity Strange Bedfellows?," Working Papers Working Paper 2015-04, Regional Research Institute, West Virginia University.

    More about this item

    Keywords

    Industry structure Specialization Industry diversity Unemployment Churning;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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