Abstract
Structural change and competition are profoundly affecting the way labor markets work in China, especially in rural areas. The rapid growth of jobs in township and village enterprises during the 1980s was forged largely by market forces and with little government oversight. Similar pressures are now playing an increasing role in urban markets, but the difficulties of state enterprises have made the transition more difficult. The inflexibility of the urban labor market has several negative effects on the performance of urban enterprises, especially SOEs. One of the problems it creates is over-staffing in SOEs, which is largely due to their failure to adjust employment with respect to efficient labor demand. The massive lay-offs that took place since 1995 demonstrate the seriousness of the over-staffing problem in the state sector of China's industry. Government officials estimate that 15 to 20 percent of state enterprise employees could be released from their companies without affecting output. This study investigates the differences in the speed of employment adjustment between state, collective, and township-village enterprises in China. Using panel data from a sample of Chinese enterprises during 1986-1990, our empirical results indicate that the speed of adjustment in production workers might be the slowest in the state-owned enterprises.
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Zheng, J. A Comparative Study of Employment Adjustment in Chinese Enterprises (1986–1990). Economics of Planning 34, 73–88 (2001). https://doi.org/10.1023/A:1017500516182
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DOI: https://doi.org/10.1023/A:1017500516182