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Economic Transition and Private-Sector Labor Demand: Evidence from Urban China

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  • Iyer, Lakshmi
  • Meng, Xin
  • Qian, Nancy
  • Zhao, Xiaoxue

Abstract

This paper studies the policy determinants of economic transition and estimates the demand for labor in the infant private sector in urban China. We show that a reform that untied access to housing in urban areas from working for the state sector accounts for more than a quarter of the overall increase in labor supply to the private sector during 1986-2005. Using the reform to instrument for private-sector labor supply, we find that private-sector labor demand is very elastic. We provide suggestive evidence that the reform equalized wages across sectors and reduced private-sector rents.

Suggested Citation

  • Iyer, Lakshmi & Meng, Xin & Qian, Nancy & Zhao, Xiaoxue, 2014. "Economic Transition and Private-Sector Labor Demand: Evidence from Urban China," CEPR Discussion Papers 9794, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9794
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    3. Cheremukhin, Anton & Golosov, Mikhail & Guriev, Sergei & Tsyvinski, Aleh, 2015. "The Economy of People’s Republic of China from 1953," CEPR Discussion Papers 10764, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Economic Transition; Labor Mobility; Structural Change;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P2 - Economic Systems - - Socialist Systems and Transition Economies
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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