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Adjusting to Really Big Changes: The labor Market in China, 1989-2009

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  • Wei Chi
  • Richard Freeman
  • Hongbin Li

Abstract

China's emerging labor market was buffeted by changes in demand and supply and institutional changes in the last two decades. Using the Chinese Urban Household Survey data from 1989 to 2009, our study shows that the market responded with substantial changes in the structure of wages and in employment and types of jobs that workers obtained that mirrors the adjustments found in labor markets in advanced economies. However, the one place where the Chinese labor market appears to diverge from the labor markets in advanced countries is the rapid convergence in earnings and occupational positions of cohorts who entered the job market under more or less favorable conditions. On this dimension, China's labor market seems more flexible than those in other countries. Three related factors may explain this pattern: (1) the rapid growth of China's economy; (2) the high rate of employee turnover; (3) the relative weakness of internal labor markets in China. Bottom line, the Chinese labor market has responded about as well as one could expect to the changes in the demand and supply factors and institutional shocks in this critical period in Chinese economic history.

Suggested Citation

  • Wei Chi & Richard Freeman & Hongbin Li, 2012. "Adjusting to Really Big Changes: The labor Market in China, 1989-2009," Working Paper 446386, Harvard University OpenScholar.
    • Handle: RePEc:qsh:wpaper:446386
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    File URL: http://scholar.harvard.edu/freeman/node/446386
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    Cited by:

    1. Zhao, Zhong & Zheng, Liang, 2023. "The Births of New Private-Owned Enterprises in an Environment of State-Owned Enterprises," IZA Discussion Papers 16259, Institute of Labor Economics (IZA).
    2. Deng, Yue & Feng, Aiya & Hu, Dezhuang, 2025. "Gender earnings gap in Chinese firms: Can it be narrowed by industrial robots?," China Economic Review, Elsevier, vol. 89(C).
    3. Ralph W. Huenemann, 2014. "The World Bank and China: Future Prospects," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(1), pages 251-256, January.
    4. Newhouse, David & Wolff, Claudia, 2014. "Cohort Size and Youth Employment Outcomes," IZA Discussion Papers 8197, IZA Network @ LISER.
    5. Bai, Chong-En & Chi, Wei & Liu, Tracy Xiao & Tang, Chao & Xu, Jian, 2021. "Boosting pension enrollment and household consumption by example: A field experiment on information provision," Journal of Development Economics, Elsevier, vol. 150(C).
    6. Xiao Dai & Jian Wu & Liang Yan, 2018. "A Spatial Evolutionary Study of Technological Innovation Talents’ Sticky Wages and Technological Innovation Efficiency Based on the Perspective of Sustainable Development," Sustainability, MDPI, vol. 10(11), pages 1-19, November.
    7. Knight, John & Deng, Quheng & Li, Shi, 2017. "China’s expansion of higher education: The labour market consequences of a supply shock," China Economic Review, Elsevier, vol. 43(C), pages 127-141.
    8. Chunbing Xing & Jianwei Xu, 2016. "Regional variation of the minimum wages in China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-22, December.
    9. Liang Zheng, 2021. "The impact of state-owned enterprises on the employment growth of manufacturing in Chinese cities: Evidence from economic census microdata," Urban Studies, Urban Studies Journal Limited, vol. 58(8), pages 1655-1673, June.
    10. Zhang, Yi & Matz, Julia Anna, 2017. "On the train to brain gain in rural China," Discussion Papers 252443, University of Bonn, Center for Development Research (ZEF).
    11. Nie, Haifeng & Xing, Chunbing, 2019. "Education expansion, assortative marriage, and income inequality in China," China Economic Review, Elsevier, vol. 55(C), pages 37-51.
    12. Guangrong Ma & Jianwei Xu & Shi Li, 2015. "The Income Redistribution Effect Of China'S Personal Income Tax: What The Micro-Data Say," Contemporary Economic Policy, Western Economic Association International, vol. 33(3), pages 488-498, July.
    13. Liu, Jing & Xing, Chunbing, 2016. "Migrate for education: An unintended effect of school district combination in rural China," China Economic Review, Elsevier, vol. 40(C), pages 192-206.
    14. Wei Chi & Morris M. Kleiner & Xiaoye Qian, 2017. "Do Occupational Regulations Increase Earnings? Evidence from China," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(2), pages 351-381, April.

    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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