The Effects of Wage Distortions on the Transition: Theory and Evidence from China

Roger Gordon and D.D. Li

Working Papers from Michigan - Center for Research on Economic & Social Theory

Abstract: Before the reforms, the Chinese government had strong distributional objectives, which it pursued mainly by direct controls over state enterprise wage rates and hiring decisions. During the reform period, similar controls over state enterprises continued, but use of them had to re ect competition with the new nonstate sector that was mostly free from these controls. Based on these distributional considerations alone, we can explain: 1) a decline in the skills of workers in the state sector as the most able workers leave, 2) higher productivity in the nonstate sector, which consists of the most able workers, 3) accounting losses in the state sector, re ecting the transfer of tax revenue to nance higher wage payments to the unskilled, and 4) restructuring within the state sector, to reduce the distortions to relative wage rates. Many of these attributes are shared with other types of transition process.

Keywords: PUBLIC SECTOR; ECONOMIC REFORM; WAGES; LABOUR MARKET; PRODUCTIVITY (search for similar items in EconPapers)
JEL-codes: H10 H20 H30 O52 P50 (search for similar items in EconPapers)
Pages: 27 pages
Date: 1997
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: The effects of wage distortions on the transition:: Theory and evidence from China (1999)
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:fth:michet:97-04

Access Statistics for this paper

More papers in Working Papers from Michigan - Center for Research on Economic & Social Theory UNIVERSITY OF MICHIGAN, DEPARTMENT OF ECONOMICS CENTER FOR RESEARCH ON ECONOMIC AND SOCIAL THEORY, ANN ARBOR MICHIGAN U.S.A..
Bibliographic data for series maintained by Thomas Krichel ().