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Embracing the Market: Entry into Self-Employment in Transitional China, 1978-1996

  • Xiaogang Wu

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    This paper introduces labor market transition as an intervening process by which the macro institutional transition to a market economy alters social stratification outcome. Rather than directly addressing income distribution, it examines the pattern of workers’ entry into self-employment in reform-era China (1978-1996), focusing on rural-urban differences and the temporal trend. Analyses of data from a national representative survey in China show that education, party membership and cadre status all deter urban workers’ entry into self-employment, while education promotes rural workers’ entry into self-employment. As marketization proceeds, the rate of entry into self-employment increases in both rural and urban China, but urban workers are increasingly more likely to take advantages of the new market opportunities. In urban China, college graduates and cadres are still less likely to be involved in self-employment, but they are becoming more likely to do so in the later phase of reform. The diversity of transition scenarios is attributed to rural-urban differences in labor market structures.

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    File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp512.pdf
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    Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 512.

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    Length: 46 pages
    Date of creation: 27 Sep 2002
    Date of revision:
    Handle: RePEc:wdi:papers:2002-512
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    1. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
    2. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766, March.
    3. Victor R. Fuchs, 1980. "Self-Employment and Labor Force Participation of Older Males (Revised)," NBER Working Papers 0584, National Bureau of Economic Research, Inc.
    4. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June.
    5. Yingyi Qian, 1999. "The Process of China's Market Transition (1978-98): The Evolutionary, Historical, and Comparative Perspectives," Working Papers 99012, Stanford University, Department of Economics.
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