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Market-oriented reforms and human capital reallocation in urban China: A gender perspective

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  • Qian, Pengzhan

Abstract

Until the early 1990s, jobs were assigned by the government in urban China, and education opportunities were limited. Under these constraints, talented people, especially women, may not have been educated or assigned to occupations that suited their abilities best, resulting in a misallocation of human capital. Over the years, market-oriented reforms, such as abolishing the job assignment system and expanding college education, have changed people’s occupational and educational choices significantly. This paper investigates the macroeconomic consequences of market-oriented reforms between 1990 and 2010. I build a quantitative model of occupational and educational choice with wedges to measure the degrees of misallocation. I find that market-oriented reforms have significantly reduced misallocations. Without any market-oriented reforms, 19% of young people in 2010 would have chosen different occupations. Consequently, the human capital of the young cohort would have been 1.6% lower, and economic output would have been 0.8% lower.

Suggested Citation

  • Qian, Pengzhan, 2025. "Market-oriented reforms and human capital reallocation in urban China: A gender perspective," Labour Economics, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:labeco:v:97:y:2025:i:c:s0927537125001356
    DOI: 10.1016/j.labeco.2025.102811
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    Keywords

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    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
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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