Adjusting to Really Big Changes: The Labor Market in China, 1989-2009

26 Pages Posted: 6 Jan 2012 Last revised: 9 Jan 2012

See all articles by Wei Chi

Wei Chi

Tsinghua University

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Li Hongbin

Tsinghua University

Date Written: January 2012

Abstract

China's emerging labor market was buffeted by changes in demand and supply and institutional changes in the last two decades. Using the Chinese Urban Household Survey data from 1989 to 2009, our study shows that the market responded with substantial changes in the structure of wages and in employment and types of jobs that workers obtained that mirrors the adjustments found in labor markets in advanced economies. However, the one place where the Chinese labor market appears to diverge from the labor markets in advanced countries is the rapid convergence in earnings and occupational positions of cohorts who entered the job market under more or less favorable conditions. On this dimension, China's labor market seems more flexible than those in other countries. Three related factors may explain this pattern: (1) the rapid growth of China's economy; (2) the high rate of employee turnover; (3) the relative weakness of internal labor markets in China. Bottom line, the Chinese labor market has responded about as well as one could expect to the changes in the demand and supply factors and institutional shocks in this critical period in Chinese economic history.

Suggested Citation

Chi, Wei and Freeman, Richard B. and Hongbin, Li, Adjusting to Really Big Changes: The Labor Market in China, 1989-2009 (January 2012). NBER Working Paper No. w17721. Available at SSRN: https://ssrn.com/abstract=1980571

Wei Chi (Contact Author)

Tsinghua University ( email )

Haidian District
Beijing, Beijing 100084
China

Richard B. Freeman

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-868-3900 (Phone)
617-868-2742 (Fax)

University of Edinburgh - School of Social and Political Studies ( email )

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United Kingdom

Harvard University ( email )

Littauer Center
Cambridge, MA 02138
United States
617-868-3900 (Phone)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE

Li Hongbin

Tsinghua University ( email )

Beijing, 100084
China

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