Agency Theory and the Chinese Enterprise • Under Reform

Jon Cauley and Todd Sandler

No 294666, Institute for Policy Reform Working Paper Series from Institute for Policy Reform

Abstract: This paper investigates structural wage reform pertaining to medium and large state-owned enterprises, within the context of the 1988 Enterprise Law. Evidence exists that this reform package failed to achieve its full potential. A primary purpose of the paper is to analyze this • failure with the aid of principal-agent analysis, in which the manager is the principal and the workers are the agents. The analysis suggests that the reforms performed poorly since the workers' incentive problem was not adequately addressed. Much of the bonuses became fixed wage supplements, not tied to the output or profit of the enterprise. Moreover, freeriding incentives among workers were not adequately addressed. Multilevel concerns and the • formation of coalitions among workers and supervisors are also analyzed. Means for making the reforms more effective are suggested. For example, rule governance can dilute collusion.

Keywords: Labor; and; Human; Capital (search for similar items in EconPapers)
Pages: 38
Date: 1991-09
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/294666/files/ipr019.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:iprwps:294666

DOI: 10.22004/ag.econ.294666

Access Statistics for this paper

More papers in Institute for Policy Reform Working Paper Series from Institute for Policy Reform
Bibliographic data for series maintained by AgEcon Search ().