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The effect of job displacement on labor market outcomes: Evidence from the Chinese state-owned enterprise reform

Xinping Tian, Jinquan Gong and Zhe Zhai

China Economic Review, 2022, vol. 72, issue C

Abstract: We estimate the long-term costs of job displacement for individuals who lost their jobs during the dramatic reform of state-owned enterprises (SOEs) in the late 1990s in China, using data from the China Health and Nutrition Survey. We find that the workers displaced during the SOE reform suffered substantial and persistent earnings losses. In addition, by comparing wage losses and reductions in employment and work hours over time, we find that the majority of long-term earnings losses were driven by declines in post-displacement wages. Moreover, we find that the displaced workers tended to find reemployment in low-skilled occupations, in the private sector, with less profitable employers, and through informal contracts, which may explain the substantial costs of displacement.

Keywords: Costs of job displacement; State-owned enterprise reform; Mass layoffs; China (search for similar items in EconPapers)
JEL-codes: J31 J63 J65 P50 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:72:y:2022:i:c:s1043951x22000013

DOI: 10.1016/j.chieco.2022.101743

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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