A Dynamic Analysis of Overstaff in China's State-Owned Enterprises
In early 1998, the new Chinese Premier Zhu Rongji proposed an ambitious new reform plan, which aims to solve the problems of state-owned enterprises (SOEs) within three years. Among these problems, overstaff in SOEs is a key and difficult issue attracting wide concern. This paper establishes a simple macro model to illustrate the possible transition process that overstaff is gradually absorbed by private enterprises and the economy grows along with inactive SOE workers converting into active labour force. It investigates the characteristics of the steady equilibrium where all overstaff has been completely absorbed. The optimal government strategies maximizing household utility and minimizing the period of transition are also discussed.
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- Byrd, William A., 1989. "Plan and market in the Chinese economy: A simple general equilibrium model," Journal of Comparative Economics, Elsevier, vol. 13(2), pages 177-204, June.
- Jinglian, Wu & Renwei, Zhao, 1987. "The dual pricing system in China's industry," Journal of Comparative Economics, Elsevier, vol. 11(3), pages 309-318, September.
- Dwight H. Perkins, 1994. "Completing China's Move to the Market," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 23-46, Spring.
- Yin, Xiangkang, 1998. "The Macroeconomic Effects of Waiting Workers in the Chinese Economy," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 150-164, March.
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