IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/72767.html
   My bibliography  Save this paper

Unemployment Duration and Job-Match Quality in Urban China: The Dynamic Impact of 2008 Labor Contract Law

Author

Listed:
  • You, Jing
  • Wang, Shaoyang

Abstract

We assess the unemployment duration-dependent impact of the 2008 Labor Contract Law on job finding probabilities and subsequently job-match quality, including job security, wages and employer-provided social insurance. Dynamic endogeneity underlying individuals’ sequential labor market outcomes is addressed by sharp regression discontinuity and correlated individual unobservables settling into non-parametric joint distribution. The law protracts employment only in the short-term. After job match, the law stabilizes employment and increases wages and insurance coverage, all in the short-term with substantial differences between urban locals and migrant workers and heterogeneity in gender.

Suggested Citation

  • You, Jing & Wang, Shaoyang, 2016. "Unemployment Duration and Job-Match Quality in Urban China: The Dynamic Impact of 2008 Labor Contract Law," MPRA Paper 72767, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:72767
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/72767/1/MPRA_paper_72767.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:eee:ecmode:v:68:y:2018:i:c:p:178-189 is not listed on IDEAS
    2. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
    3. Hotz, V Joseph & Kydland, Finn E & Sedlacek, Guilherme L, 1988. "Intertemporal Preferences and Labor Supply," Econometrica, Econometric Society, vol. 56(2), pages 335-360, March.
    4. Böckerman, Petri & Ilmakunnas, Pekka & Johansson, Edvard, 2011. "Job security and employee well-being: Evidence from matched survey and register data," Labour Economics, Elsevier, vol. 18(4), pages 547-554, August.
    5. Yu Song & Jianmin Zheng & Wenrong Qian, 2009. "To Be, or Not to Be: Rural Women's Migration Decisions," Chinese Economy, Taylor & Francis Journals, vol. 42(4), pages 63-74, July.
    6. Chen, Yu-Fu & Funke, Michael, 2009. "China's new Labour Contract Law: No harm to employment?," China Economic Review, Elsevier, vol. 20(3), pages 558-572, September.
    7. Dale T. Mortensen, 1982. "The Matching Process as a Noncooperative Bargaining Game," NBER Chapters,in: The Economics of Information and Uncertainty, pages 233-258 National Bureau of Economic Research, Inc.
    8. Lars Ljungqvist, 2002. "How Do Lay--off Costs Affect Employment?," Economic Journal, Royal Economic Society, vol. 112(482), pages 829-853, October.
    9. Olivier Jean Blanchard & Peter Diamond, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 417-434.
    10. repec:bla:coecpo:v:35:y:2017:i:3:p:421-438 is not listed on IDEAS
    11. Pedro Portugal & Olivier Blanchard, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, vol. 91(1), pages 187-207, March.
    12. Lars Ljungqvist & Thomas J. Sargent, 1998. "The European Unemployment Dilemma," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 514-550, June.
    13. Giles, John & Park, Albert & Cai, Fang & Du, Yang, 2012. "Weathering a storm : survey-based perspectives on employment in China in the aftermath of the global financial crisis," Policy Research Working Paper Series 5984, The World Bank.
    14. Federico Cingano & Marco Leonardi & Julián Messina & Giovanni Pica, 2016. "Employment Protection Legislation, Capital Investment and Access to Credit: Evidence from Italy," Economic Journal, Royal Economic Society, vol. 126(595), pages 1798-1822, September.
    15. Hanushek, Eric A. & Schwerdt, Guido & Wiederhold, Simon & Woessmann, Ludger, 2015. "Returns to skills around the world: Evidence from PIAAC," European Economic Review, Elsevier, vol. 73(C), pages 103-130.
    16. Zhiming Cheng & Russell Smyth & Fei Guo, 2013. "The Impact of China’s New Labour Contract Law On Socioeconomic Outcomes for Migrant and Urban Workers," Monash Economics Working Papers 51-13, Monash University, Department of Economics.
    17. Kuhn, Peter J. & Shen, Kailing, 2014. "Do Employers Prefer Undocumented Workers? Evidence from China's Hukou System," IZA Discussion Papers 8289, Institute for the Study of Labor (IZA).
    18. Liu, Yang, 2013. "Labor market matching and unemployment in urban China," China Economic Review, Elsevier, vol. 24(C), pages 108-128.
    19. Marco Caliendo & Konstantinos Tatsiramos & Arne Uhlendorff, 2013. "Benefit Duration, Unemployment Duration And Job Match Quality: A Regression‐Discontinuity Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 604-627, June.
    20. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
    21. Pierre Cahuc & Olivier Charlot & Franck Malherbet, 2016. "Explaining The Spread Of Temporary Jobs And Its Impact On Labor Turnover," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57, pages 533-572, May.
    22. Dong, Xiao-yuan & Xu, Lixin Colin, 2009. "Labor restructuring in China: Toward a functioning labor market," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 287-305, June.
    23. Koutentakis, Franciscos, 2008. "The effect of temporary contracts on job security of permanent workers," Economics Letters, Elsevier, vol. 101(3), pages 220-222, December.
    24. Francesco D'Amuri & Giovanni Peri, 2016. "Immigration, Jobs, And Employment Protection: Evidence From Europe Before And During The Great Recession," World Scientific Book Chapters,in: The Economics of International Migration, chapter 5, pages 153-185 World Scientific Publishing Co. Pte. Ltd..
    25. Gordon Betcherman, 2015. "Labor Market Regulations: What do we know about their Impacts in Developing Countries?," World Bank Research Observer, World Bank Group, vol. 30(1), pages 124-153.
    26. Gallagher, Mary & Giles, John & Park, Albert & Wang, Meiyan, 2013. "China's 2008 labor contract law : implementation and implications for China's workers," Policy Research Working Paper Series 6542, The World Bank.
    27. Marco Leonardi & Giovanni Pica, 2013. "Who Pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation," Economic Journal, Royal Economic Society, vol. 123(12), pages 1236-1278, December.
    28. Eli Friedman & Ching Kwan Lee, 2010. "Remaking the World of Chinese Labour: A 30-Year Retrospective," British Journal of Industrial Relations, London School of Economics, vol. 48(3), pages 507-533, September.
    29. Casey B. Mulligan & Trevor S. Gallen, 2013. "Wedges, Wages, and Productivity under the Affordable Care Act," NBER Working Papers 19771, National Bureau of Economic Research, Inc.
    30. Ehrenberg, Ronald G & Oaxaca, Ronald L, 1976. "Unemployment Insurance, Duration of Unemployment, and Subsequent Wage Gain," American Economic Review, American Economic Association, vol. 66(5), pages 754-766, December.
    31. Xiaobing Wang & Nick Weaver & Jing You, 2013. "The Social Security Function Of Agriculture In China," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(1), pages 1-10, January.
    32. Konstantinos Tatsiramos & Jan C. Ours, 2014. "Labor Market Effects Of Unemployment Insurance Design," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 284-311, April.
    33. Elena Simintzi & Vikrant Vig & Paolo Volpin, 2015. "Labor Protection and Leverage," Review of Financial Studies, Society for Financial Studies, vol. 28(2), pages 561-591.
    34. Salvatori, Andrea, 2010. "Labour contract regulations and workers' wellbeing: International longitudinal evidence," Labour Economics, Elsevier, vol. 17(4), pages 667-678, August.
    35. Calcagnini, Giorgio & Ferrando, Annalisa & Giombini, Germana, 2014. "Does employment protection legislation affect firm investment? The European case," Economic Modelling, Elsevier, vol. 36(C), pages 658-665.
    36. Olivier Blanchard & Florence Jaumotte & Prakash Loungani, 2014. "Labor market policies and IMF advice in advanced economies during the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    37. Meng, Xin & Kong, Sherry Tao & Zhang, Dandan, 2010. "How Much Do We Know about the Impact of the Economic Downturn on the Employment of Migrants?," ADBI Working Papers 194, Asian Development Bank Institute.
    38. Gary Solon & Steven J. Haider & Jeffrey M. Wooldridge, 2015. "What Are We Weighting For?," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 301-316.
    39. David Roodman, 2011. "Fitting fully observed recursive mixed-process models with cmp," Stata Journal, StataCorp LP, vol. 11(2), pages 159-206, June.
    40. Gao, Qin & Yang, Sui & Li, Shi, 2012. "Labor contracts and social insurance participation among migrant workers in China," China Economic Review, Elsevier, vol. 23(4), pages 1195-1205.
    41. 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.
    42. Kahn, Lawrence M., 2010. "Employment protection reforms, employment and the incidence of temporary jobs in Europe: 1996-2001," Labour Economics, Elsevier, vol. 17(1), pages 1-15, January.
    43. Lu, Zhigang & Song, Shunfeng, 2006. "Rural-urban migration and wage determination: The case of Tianjin, China," China Economic Review, Elsevier, vol. 17(3), pages 337-345.
    44. repec:eee:jfinec:v:125:y:2017:i:2:p:369-388 is not listed on IDEAS
    45. Giles, John & Park, Albert & Cai, Fang, 2006. "Reemployment of dislocated workers in urban China: The roles of information and incentives," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 582-607, September.
    46. Russell Cooper & Guan Gong & Ping Yan, 2013. "Costly Labor Adjustment: General Equilibrium Effects of China's Employment Regulations," NBER Working Papers 19324, National Bureau of Economic Research, Inc.
    47. Yaohui Zhao, 2003. "The Role of Migrant Networks in Labor Migration: The Case of China," Contemporary Economic Policy, Western Economic Association International, vol. 21(4), pages 500-511, October.
    48. Rachel Griffith & Gareth Macartney, 2014. "Employment Protection Legislation, Multinational Firms, and Innovation," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 135-150, March.
    49. Lars Ljungqvist & Thomas J. Sargent, 2011. "A Labor Supply Elasticity Accord?," American Economic Review, American Economic Association, vol. 101(3), pages 487-491, May.
    50. Sabina Avdagic, 2015. "Does Deregulation Work? Reassessing the Unemployment Effects of Employment Protection," British Journal of Industrial Relations, London School of Economics, vol. 53(1), pages 6-26, March.
    51. repec:taf:ctwqxx:v:30:y:2009:i:3:p:485-501 is not listed on IDEAS
    52. Fernando Alvarez & Marcelo Veracierto, 1998. "Search, self-insurance and job-security provisions," Working Paper Series WP-98-2, Federal Reserve Bank of Chicago.
    53. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
    54. Ben Lockwood, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," Review of Economic Studies, Oxford University Press, vol. 58(4), pages 733-753.
    55. Knight, John & Li, Shi, 2006. "Unemployment duration and earnings of re-employed workers in urban China," China Economic Review, Elsevier, vol. 17(2), pages 103-119.
    56. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1371-1391.
    57. Nielsen, Ingrid & Smyth, Russell, 2008. "Job satisfaction and response to incentives among China's urban workforce," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 1921-1936, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    unemployment; wage; social insurance; regression-discontinuity design; China;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:72767. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.