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A Dynamic Analysis of Overstaff in China's State-Owned Enterprises

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  • Xiangkang Yin

    (Department of Economics and Finance, La Trobe University)

Abstract

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.

Suggested Citation

  • Xiangkang Yin, 1999. "A Dynamic Analysis of Overstaff in China's State-Owned Enterprises," Working Papers 1999.03, School of Economics, La Trobe University.
    • Handle: RePEc:ltr:wpaper:1999.03
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    2. Garth Heutel & David L. Kelly, 2013. "Incidence and Environmental Effects of Distortionary Subsidies," NBER Working Papers 18924, National Bureau of Economic Research, Inc.
    3. Zhongmin Wu & Shujie Yao, 2006. "On Unemployment Inflow and Outflow in Urban China," Regional Studies, Taylor & Francis Journals, vol. 40(8), pages 811-822.
    4. Mu, Rui & Jong, Martin de & Koppenjan, Joop, 2011. "The rise and fall of Public–Private Partnerships in China: a path-dependent approach," Journal of Transport Geography, Elsevier, vol. 19(4), pages 794-806.
    5. David L. Kelly, 2006. "Subsidies to Industry and the Environment," Working Papers 0602, University of Miami, Department of Economics.
    6. Tomasz Mickiewicz & Anna Zalewska, 2002. "Deindustrialisation. Lessons from the StructuralOutcomes of Post-Communist Transition," William Davidson Institute Working Papers Series 463, William Davidson Institute at the University of Michigan.
    7. Garth Heutel & David L. Kelly, 2016. "Incidence, Environmental, and Welfare Effects of Distortionary Subsidies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 361-415.
    8. Tan, Youchao & Liu, Xiumei & Sun, Hanwen & Zeng, Cheng(Colin), 2022. "Population ageing, labour market rigidity and corporate innovation: Evidence from China," Research Policy, Elsevier, vol. 51(2).
    9. Bajona, Claustre & Kelly, David L., 2012. "Trade and the environment with pre-existing subsidies: A dynamic general equilibrium analysis," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 253-278.
    10. Lin, Shuanglin & ROWE, Wei, 2006. "Determinants of the profitability of China's regional SOEs," China Economic Review, Elsevier, vol. 17(2), pages 120-141.

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