Review of Industrial Organization

, Volume 13, Issue 6, pp 621–635 | Cite as

Labor Flexibility, Ownership and Firm Performance in China

  • Julia Lane
  • Harry G. Broadman
  • Inderjit Singh


Developed and developing countries alike areprivatizing or corporatizing state owned enterprises(SOEs), often citing the flexibility to hire and shedlabor as an advantage. However, there is littleempirical evidence on the extent to which thisimproves firm performance. This paper investigates thelinkage between labor flexibility, ownership and firmperformance using China as a case study. We find thatSOEs are much less able to adjust quickly to demandshocks than are other ownership forms and that thedegree of worker input into hiring and firingdecisions slows the ability of firms to adapt,negatively affecting firm performance.


Firm Performance Industrial Organization State Owned Enterprise Labor Flexibility Work Input 
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Copyright information

© Kluwer Academic Publishers 1998

Authors and Affiliations

  • Julia Lane
    • 1
  • Harry G. Broadman
    • 2
  • Inderjit Singh
    • 2
  1. 1.Economics DepartmentAmerican UniversityWashington DC
  2. 2.The World BankWashington DC

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