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Labor market matching and unemployment in urban China

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  • Liu, Yang

Abstract

In the traditional labor supply–demand approach, unemployment usually results from a lack of labor demand or excess of labor supply. However, in urban China, unemployment coexists with a conflicting phenomenon, shortage of workers in firms. In this study, we employ a novel approach to tackle this issue, search and matching theory, the empirical study of which has not drawn much attention in China. Our multiple model consisted of job-worker matching, job creation and destruction, rural–urban immigration and on-the-job search, and unemployment changes in China. We used non-linear estimation and the three-stage least squares analysis in this study. We found that matching efficiency declined greatly during the 1996–2008 period. The econometric model and simulation results indicated four key factors that led to changes in China's unemployment level: matching efficiency, job destruction, productivity growth, and job-search services. Finally, by using our econometric model, we identified the reasons for the shifts in the Beveridge curve.

Suggested Citation

  • Liu, Yang, 2013. "Labor market matching and unemployment in urban China," China Economic Review, Elsevier, vol. 24(C), pages 108-128.
  • Handle: RePEc:eee:chieco:v:24:y:2013:i:c:p:108-128
    DOI: 10.1016/j.chieco.2012.10.006
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:ecmode:v:71:y:2018:i:c:p:220-233 is not listed on IDEAS
    2. You, Jing & Wang, Shaoyang, 2018. "Unemployment duration and job-match quality in urban China: The dynamic impact of 2008 Labor Contract Law," Economic Modelling, Elsevier, vol. 71(C), pages 220-233.

    More about this item

    Keywords

    Unemployment; Search theory; Vacancies; Matching efficiency; Econometric models;

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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