Towards a Labour Market in China

John Knight and Lina Song

Oxford Review of Economic Policy, 1995, vol. 11, issue 4, 97-117

Abstract: The Chinese transition from an administered labour and wage system towards a properly functioning labour market is examined. China has a labour surplus economy par excellence and its labour institutions--spreading and disguising unemployment--have to be viewed in that light. A contrast is drawn between 'insiders' and 'outsiders', the former state-employed urban residents and the latter the rapidly growing numbers of private-sector employees, rural-urban migrants, and rural industry workers. The operation of market forces outside the urban state sector is assessed. The egalitarian urban wage structure is analysed, and the effects of the urban reforms on wages and unemployment are examined. Urban labour-market reform has not proceeded very far. The case for and the obstacles to further reform are investigated: there are economic advantages but political impediments. The problem is systemic and requires reform in other areas as well, giving rise to issues of sequencing. Copyright 1995 by Oxford University Press.

Date: 1995
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