The Decline of In-kind Wage Payments in Urban China
Chinese collective and state-owned enterprises have tended to over-compensate their employees. Using payments in kind as an example, this paper examines why and how firms engage in such 'irrational' behavior. In-kind payments (payments made in terms of consumer goods) used to be an important aspect of urban life in China - 68% of our sample workers received payments in kind in 1988. The ratio declined to only 10% in 1999. In explaining the prevalence of in-kind payment in the 1980s and the subsequent decline in the 1990s, two hypotheses are proposed. The first is the lack of access to consumer goods by individuals. The second is to evade the control on wage bills imposed by the government. Empirical evidence from an urban household survey is consistent with the second hypothesis. The results imply that the introduction of a hard budget constraint is essential to ensure the rational behavior of public enterprises in setting their wage payments.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 1 (2003)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RCEA20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RCEA20|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Richard B. Freeman, 1978. "The Effect of Trade Unionism on Fringe Benefits," NBER Working Papers 0292, National Bureau of Economic Research, Inc.
- Long, James E & Scott, Frank A, 1982. "The Income Tax and Nonwage Compensation," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 211-219, May.
- Thomas A. Wolf, 1991. "The Lessons of Limited Market-Oriented Reform," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 45-58, Fall.
- Woo Wing Thye & Hai Wen & Jin Yibiao & Fan Gang, 1994. "How Successful Has Chinese Enterprise Reform Been? Pitfalls in Opposite Biases and Focus," Journal of Comparative Economics, Elsevier, vol. 18(3), pages 410-437, June.
- Woodbury, Stephen A, 1983. "Substitution between Wage and Nonwage Benefits," American Economic Review, American Economic Association, vol. 73(1), pages 166-182, March.
- Gary H. Jefferson & Thomas G. Rawski, 1994. "Enterprise Reform in Chinese Industry," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 47-70, Spring.
- Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-1320, September.
- Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-280, Part I, M.
When requesting a correction, please mention this item's handle: RePEc:taf:jocebs:v:1:y:2003:i:2:p:245-258. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.