Labor Market Dynamics in Urban China and the Role of the State Sector

Shuaizhang Feng () and Naijia Guo ()
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Shuaizhang Feng: Shanghai University of Finance and Economics
Naijia Guo: Chinese University of Hong Kong

No 12170, IZA Discussion Papers from IZA Network @ LISER

Abstract: This paper studies the effect of state-owned enterprises on the dynamics of the Chinese urban labor market. Using longitudinal monthly panel data, we document very low dynamics in the labor market, especially in the state sector. We develop and calibrate an equilibrium search and matching model with three differences between the state and the non-state sector: labor productivity, labor adjustment cost, and workers' bargaining power. Counterfactual analysis shows that the lack of dynamics is mainly driven by the strong bargaining power of state-sector workers. Eliminating the differences between the two sectors substantially reduces the unemployment rate and long-term unemployment rate.

Keywords: China; search and matching; labor market dynamics; state sector; long-term unemployment (search for similar items in EconPapers)
JEL-codes: J45 J64 P23 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2019-02
New Economics Papers: this item is included in nep-cna, nep-lab, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Journal of Comparative Economics, 2021, 49 (4), 918-932

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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp12170

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