IDEAS home Printed from https://ideas.repec.org/a/wly/ectrin/v34y2026i1p23-43.html

Piecemeal Labour Market Liberalisation and Entrepreneurship in China's Transition

Author

Listed:
  • Ziyan Yang
  • Jiakun Ma

Abstract

Existing studies argue that China's dual‐track approach to economic reforms offers lessons for other transition economies. Ignoring the piecemeal nature of the track‐merging process, the literature has not supported this theory empirically. We identify the impacts of China's piecemeal unification of the dual‐track job‐assignment system on entrepreneurship, arriving at three conclusions. First, the partial unification of the system has played as important a role as full unification in relaxing constraints on college graduates' entrepreneurship incentives. Second, the system encourages college graduates to take planned‐track jobs first and then traps them on the planned track through career‐path dependence, explaining the mechanism. Third, with respect to the three types of planned‐track jobs, the piecemeal merging completely eliminates bias towards college graduates associated with jobs in state‐owned enterprises and weakens their career‐path dependence while only partially correcting for bias associated with government and institute jobs without affecting career‐path dependence in those cases.

Suggested Citation

  • Ziyan Yang & Jiakun Ma, 2026. "Piecemeal Labour Market Liberalisation and Entrepreneurship in China's Transition," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 34(1), pages 23-43, January.
    • Handle: RePEc:wly:ectrin:v:34:y:2026:i:1:p:23-43
    DOI: 10.1111/ecot.12454
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecot.12454
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ecot.12454?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Loren Brandt & Trevor Tombe & Xiadong Zhu, 2013. "Factor Market Distortions Across Time, Space, and Sectors in China," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 39-58, January.
    2. Li, Lixing & Wu, Xiaoyu, 2014. "Housing price and entrepreneurship in China," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 436-449.
    3. Lawrence J. Lau & Yingyi Qian & Gerard Roland, 2000. "Reform without Losers: An Interpretation of China's Dual-Track Approach to Transition," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 120-143, February.
    4. Shing-Yi Wang, 2011. "State Misallocation and Housing Prices: Theory and Evidence from China," American Economic Review, American Economic Association, vol. 101(5), pages 2081-2107, August.
    5. Dong, Keyong & Ye, Xiangfeng, 2003. "Social security system reform in China," China Economic Review, Elsevier, vol. 14(4), pages 417-425.
    6. Ross Levine & Yona Rubinstein, 2017. "Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(2), pages 963-1018.
    7. Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2018. "Lost Einsteins: who becomes an inventor in America?," CentrePiece - The magazine for economic performance 522, Centre for Economic Performance, LSE.
    8. Wei Li, 1999. "A Tale of Two Reforms," RAND Journal of Economics, The RAND Corporation, vol. 30(1), pages 120-136, Spring.
    9. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    10. 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.
    11. Hanming Fang & Ming Li & Zenan Wu & Yapei Zhang, 2023. "Reluctant Entrepreneurs: Evidence from China’s SOE Reform," PIER Working Paper Archive 23-014, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    12. Theodore Groves & Yongmiao Hong & John McMillan & Barry Naughton, 1994. "Autonomy and Incentives in Chinese State Enterprises," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(1), pages 183-209.
    13. Justin Van Der Sluis & Mirjam Van Praag & Wim Vijverberg, 2008. "Education And Entrepreneurship Selection And Performance: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 795-841, December.
    14. Linda Y. Yueh, 2004. "Wage Reforms in China During the 1990s," Asian Economic Journal, East Asian Economic Association, vol. 18(2), pages 149-164, June.
    15. Minniti, Maria, 2005. "Entrepreneurship and network externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 57(1), pages 1-27, May.
    16. Amalavoyal Chari & Elaine M Liu & Shing-Yi Wang & Yongxiang Wang, 2021. "Property Rights, Land Misallocation, and Agricultural Efficiency in China [Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(4), pages 1831-1862.
    17. Shing-Yi Wang, 2012. "Credit Constraints, Job Mobility, and Entrepreneurship: Evidence from a Property Reform in China," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 532-551, May.
    18. Hanming Fang & Ming Li & Zenan Wu & Yapei Zhang, 2023. "Reluctant Entrepreneurs: Evidence from China’s SOE Reform," NBER Working Papers 31700, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guriev, Sergei & Cheremukhin, Anton & Golosov, Mikhail & Tsyvinski, Aleh, 2015. "The Economy of People’s Republic of China from 1953," CEPR Discussion Papers 10764, Centre for Economic Policy Research.
    2. Anton Cheremukhin & Mikhail Golosov & Sergei Guriev & Aleh Tsyvinski, 2015. "The Economy of People’s Republic of China from 1953," NBER Working Papers 21397, National Bureau of Economic Research, Inc.
    3. Tianshu Chu & Qiang Wen, 2019. "Does College Education Promote Entrepreneurship in China?," Journal of Labor Research, Springer, vol. 40(4), pages 463-486, December.
    4. Michelacci, Claudio & Schivardi, Fabiano, 2020. "Are they all like Bill, Mark, and Steve? The education premium for entrepreneurs," Labour Economics, Elsevier, vol. 67(C).
    5. Kunwon Ahn & John V. Winters, 2023. "Does education enhance entrepreneurship?," Small Business Economics, Springer, vol. 61(2), pages 717-743, August.
    6. Chang Liu & Wei Xiong, 2018. "China's Real Estate Market," NBER Working Papers 25297, National Bureau of Economic Research, Inc.
    7. Logan (Geng) Li & Zhengwei Wang, 2022. "Understanding the long‐term effects of Keju: The case of entrepreneurship in China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(4), pages 665-689, October.
    8. Xiandeng Jiang & Zheng Pan & Ningru Zhao, 2023. "Relative Value vs Absolute Value: Housing Wealth and Labor Supply," The Journal of Real Estate Finance and Economics, Springer, vol. 66(1), pages 41-76, January.
    9. Aslan, Hadiye & Kumar, Praveen, 2021. "Globalization and entrepreneurial entry and exit: Evidence from U.S. households," Journal of Monetary Economics, Elsevier, vol. 120(C), pages 83-100.
    10. Gao,Nan & Ma,Yuanyuan & Xu,L. Colin, 2020. "Credit Constraints and Fraud Victimization : Evidence from a Representative Chinese Household Survey," Policy Research Working Paper Series 9460, The World Bank.
    11. Jie Chen & Mingzhi Hu & Zhenguo Lin, 2023. "China’s Housing Reform and Labor Market Participation," The Journal of Real Estate Finance and Economics, Springer, vol. 67(2), pages 218-242, August.
    12. Bei Luo & Terence Tai-Leung Chong, 2019. "Regional differences in self-employment in China," Small Business Economics, Springer, vol. 53(3), pages 813-837, October.
    13. repec:cuf:journl:y:2017:v:18:i:1:zhaoli is not listed on IDEAS
    14. Wang, Li & Liu, Lihua & Dai, Yunhao, 2021. "Owning your future: Entrepreneurship and the prospects of upward mobility in China," Economic Modelling, Elsevier, vol. 104(C).
    15. Jianmei Zhao & Jiandong Li, 2017. "The Dual Effects of Housing on Portfolio Choices: Evidence from Urban China," Annals of Economics and Finance, Society for AEF, vol. 18(2), pages 253-276, November.
    16. Shulin Xu & Kangqi Jiang, 2024. "Knowledge creates value: the role of financial literacy in entrepreneurial behavior," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.
    17. Bhatt, Vipul & Liao, Mouhua & Zhao, Min Qiang, 2023. "Government policy and land price dynamics: A quantitative assessment of China’s factor market reforms," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    18. Zhiyong Liu & Yue Qiao, 2012. "Abuse of Market Dominance Under China’s 2007 Anti-monopoly Law: A Preliminary Assessment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(1), pages 77-107, August.
    19. Svejnar, Jan, 2007. "China in Light of the Performance of Central and East European Economies," CEPR Discussion Papers 6320, Centre for Economic Policy Research.
    20. Gergely Horváth & Rui Zhang, 2022. "Ethnic entrepreneurship, assimilation, and integration policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 781-816, August.
    21. Francesco Campo & Luca Nunziata & Lorenzo Rocco, 2024. "Business is tense: new evidence on how language affects economic activity," Journal of Economic Growth, Springer, vol. 29(1), pages 121-149, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ectrin:v:34:y:2026:i:1:p:23-43. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)2577-6983 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.