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Labor restructuring in China: Toward a functioning labor market

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  • Dong, Xiao-yuan
  • Xu, Lixin Colin

Abstract

This paper examines the patterns and determinants of the labor restructuring process in China using two large firm-level datasets for the period between 1998 and 2002. We find that the public sector has undergone substantial labor retrenchment. The removal of employment guarantees for state workers has led to substantial employment shifts both within and between sectors. As compared to many Central and East European countries and the countries of the Commonwealth of Independent States in their early phases of transition, China has experienced a more synchronized pace of job destruction and creation as well as higher rates of excessive reallocation. Our results also show that the employment adjustment and downsizing process has been driven largely by market forces. We find a notable resemblance in the patterns of enterprise response to demand shocks across the public and the private sectors. Journal of Comparative Economics 37 (2) (2009) 287-305.

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  • Dong, Xiao-yuan & Xu, Lixin Colin, 2009. "Labor restructuring in China: Toward a functioning labor market," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 287-305, June.
  • Handle: RePEc:eee:jcecon:v:37:y:2009:i:2:p:287-305
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    Cited by:

    1. Liu, Hong & Zhao, Zhong, 2014. "Parental job loss and children's health: Ten years after the massive layoff of the SOEs' workers in China," China Economic Review, Elsevier, vol. 31(C), pages 303-319.
    2. Yuhao Ge & Hartmut Lehmann, 2013. "The costs of worker displacement in urban labor markets of China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    3. Rickne, Johanna, 2013. "Labor market conditions and social insurance in China," China Economic Review, Elsevier, vol. 27(C), pages 52-68.
    4. Y. Ge & H. Lehmann, 2013. "The Costs of Worker Displacement in Urban Labor Markets of China," Working Papers wp876, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Yueping Song & Xiao-yuan Dong, 2011. "Gender and Occupational Mobility in Urban China during the Economic Transition," Departmental Working Papers 2011-01, The University of Winnipeg, Department of Economics.
    6. Nie, Huihua & Jiang, Ting & Yang, Rudai, 2012. "A Review and Reflection on the Use and Abuse of Chinese Industrial Enterprises Database," MPRA Paper 50945, University Library of Munich, Germany.
    7. Zhu, Rong, 2011. "Individual heterogeneity in returns to education in urban China during 1995-2002," Economics Letters, Elsevier, vol. 113(1), pages 84-87, October.
    8. Giovanni Dosi & Xiaodan Yu, 2017. "Technological catching-up, sales dynamics and employment growth: evidence from China's manufacturing firms," LEM Papers Series 2017/27, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    9. Hang Gao & Joseph Marchand & Tao Song, 2013. "The Supply and Demand Factors Behind the Relative Earnings Increases in Urban China at the Turn of the 21st Century," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(1), pages 121-143, March.
    10. Joanna Tyrowicz & Lucas Velde & Jan Svejnar, 2017. "Effects Of Labor Reallocation On Productivity And Inequality—Insights From Studies On Transition," Journal of Economic Surveys, Wiley Blackwell, vol. 31(3), pages 712-732, July.
    11. Zhaopeng Frank Qu & Zhong Zhao, 2014. "Evolution of the Chinese rural-urban migrant labor market from 2002 to 2007," China Agricultural Economic Review, Emerald Group Publishing, vol. 6(2), pages 316-334, April.
    12. Jan Svejnar & Joanna Tyrowicz & Lucas van der Velde, 2015. "Productivity and Inequality Effects of Rapid Labor Reallocation – Insights from a Meta-Analysis of Studies on Transition," Working Papers 2015-11, Faculty of Economic Sciences, University of Warsaw.
    13. repec:wsi:serxxx:v:62:y:2017:i:02:n:s0217590815500885 is not listed on IDEAS
    14. Jan Fidrmuc & Shuo Huang, 2013. "Unemployment, Growth and Speed of Transition in China," CESifo Working Paper Series 4410, CESifo Group Munich.
    15. Pradeep Mitra & Alexander Muravyev & Mark Schaffer, 2014. "Labor reallocation and firm growth: benchmarking transition countries against mature market economies," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-22, December.
    16. Lu, Yi & Png, Ivan P.L. & Tao, Zhigang, 2013. "Do institutions not matter in China? Evidence from manufacturing enterprises," Journal of Comparative Economics, Elsevier, pages 74-90.
    17. Tyrowicz, Joanna & Van der Velde, Lucas, 2017. "Labor Reallocation and Demographics," IZA Discussion Papers 11249, Institute for the Study of Labor (IZA).
    18. Dong, Xiao-yuan & Pandey, Manish, 2012. "Gender and labor retrenchment in Chinese state owned enterprises: Investigation using firm-level panel data," China Economic Review, Elsevier, vol. 23(2), pages 385-395.
    19. Laixun Zhao, 2016. "A Simple Model of the Chinese Hukou System and Some Ongoing Reforms," Discussion Paper Series DP2016-03, Research Institute for Economics & Business Administration, Kobe University, revised Jan 2017.
    20. You, Jing & Wang, Shaoyang, 2016. "Unemployment Duration and Job-Match Quality in Urban China: The Dynamic Impact of 2008 Labor Contract Law," MPRA Paper 72767, University Library of Munich, Germany.
    21. Joanna Tyrowicz & Lucas van der Velde, 2014. "Can We Really Explain Worker Flows in Transition Economies?," Working Papers 2014-28, Faculty of Economic Sciences, University of Warsaw.
    22. Jingyi Huang & Yumei Guo & Yang Song, 2016. "Intergenerational transmission of education in China: Pattern, mechanism, and policies," Working Papers 415, ECINEQ, Society for the Study of Economic Inequality.
    23. Fields, Gary S. & Song, Yang, 2013. "A Theoretical Model of the Chinese Labor Market," IZA Discussion Papers 7278, Institute for the Study of Labor (IZA).
    24. Ma, Hong & Qiao, Xue & Xu, Yuan, 2015. "Job creation and job destruction in China during 1998–2007," Journal of Comparative Economics, Elsevier, pages 1085-1100.

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