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China's new labour contract law: No harm to employment?

Author

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  • Michael Funke
  • Yu-Fu Chen

Abstract

In January 2008, China imposed a new labour contract law. This new law is the most significant reform to the law of employment relations in mainland China in more than a decade. The paper provides a theoretical framework on the inter-linkages between labour market regulation, option value and the choice and timing of employment. All in all, the paper demonstrates that the Labour Contract Law in it´s own right will have only small impacts upon employment in the fast-growing Chinese economy. On the contrary, induced increasing unit labour costs represent the real issue and may reduce employment.

Suggested Citation

  • Michael Funke & Yu-Fu Chen, 2009. "China's new labour contract law: No harm to employment?," Quantitative Macroeconomics Working Papers 20909b, Hamburg University, Department of Economics.
  • Handle: RePEc:ham:qmwops:20909b
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. You, Jing & Wang, Shaoyang, 2018. "Unemployment duration and job-match quality in urban China: The dynamic impact of 2008 Labor Contract Law," Economic Modelling, Elsevier, vol. 71(C), pages 220-233.
    2. Caixia Chen & Patsy Perry & Yixiong Yang & Cheng Yang, 2017. "Decent Work in the Chinese Apparel Industry: Comparative Analysis of Blue-Collar and White-Collar Garment Workers," Sustainability, MDPI, vol. 9(8), pages 1-19, August.
    3. Tony Fang & Caroline Gunterberg & Emma Larsson, 2010. "Sourcing in an Increasingly Expensive China: Four Swedish Cases," Journal of Business Ethics, Springer, vol. 97(1), pages 119-138, November.
    4. Günter Schucher, 2009. "China’s Employment Crisis – A Stimulus for Policy Change?," Journal of Current Chinese Affairs - China aktuell, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 38(2), pages 121-144.
    5. Akee, Randall & Zhao, Liqiu & Zhao, Zhong, 2019. "Unintended consequences of China's new labor contract law on unemployment and welfare loss of the workers," China Economic Review, Elsevier, vol. 53(C), pages 87-105.
    6. Farndale, Elaine & Beamond, Maria & Corbett-Etchevers, Isabelle & Xu, Shiyong, 2022. "Accessing host country national talent in emerging economies: A resource perspective review and future research agenda," Journal of World Business, Elsevier, vol. 57(1).
    7. Xiaoying Li & Richard B. Freeman, 2015. "How Does China's New Labour Contract Law Affect Floating Workers?," British Journal of Industrial Relations, London School of Economics, vol. 53(4), pages 711-735, December.
    8. Kong, Dongmin & Liu, Shasha & Xiang, Junyi, 2018. "Political promotion and labor investment efficiency," China Economic Review, Elsevier, vol. 50(C), pages 273-293.

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    More about this item

    Keywords

    China; Labour Contract Law; Real Options; Employment;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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