Wage Reform, Soft Budget Constraints and Competition

Jian Sun

No wp-1999-156, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Since the beginning of the Chinese economic reforms in 1978, there has been a series of effort to reform the labour compensation practice in state- owned enterprises to strengthen the link between pay and productivity. Despite the reforms, however, rapid increases in wage rates occurred in state-owned enterprises. Moreover, although state-owned enterprises have much lower productivity gains than non-state enterprises, they pay substantially higher wages and have faster wage growth. This paper studies the effects of institutional factors on labour compensation in state-owned enterprises.

Keywords: Organizational behavior; Post-communism; Public policy (Law); Wage differentials; Wages (search for similar items in EconPapers)
Date: 1999
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