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Unemployment, Growth and Speed of Transition in China

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  • Jan Fidrmuc
  • Shuo Huang

Abstract

We investigate the relationship between unemployment and growth in China. We find considerable differences in the nature of this relationship across Chinese regions. We argue that this may reflect the different progress in transition across regions, in line with the Aghion-Blanchard model of optimal speed of transition. When we test this model, we indeed find a hump-shaped relationship between unemployment and our proxy for the speed of reform. The current unemployment in China, furthermore, appears to be close to the level associated with optimal speed of transition.

Suggested Citation

  • Jan Fidrmuc & Shuo Huang, 2013. "Unemployment, Growth and Speed of Transition in China," CESifo Working Paper Series 4410, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4410
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp4410.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    unemployment; Okun’s Law; growth; optimal speed of transition; China;

    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
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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