The Costs of Worker Displacement in Urban Labor Markets of China

46 Pages Posted: 13 Apr 2013

See all articles by Yuhao Ge

Yuhao Ge

Renmin University of China

Hartmut Lehmann

University of Bologna - School of Economics, Management, and Statistics; IZA Institute of Labor Economics

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Abstract

This paper analyzes the costs of job loss in China, using unique new data from the Rural-to-Urban Migration in China (RUMIC) data set for the year 2009. We investigate conventional labor market outcomes upon displacement like the length of unemployment spells, hours worked and monthly earnings. We also analyze whether displaced workers are more likely to be in informal employment relationships or self-employed or less happy than their non-displaced counterparts. We also look at health and psychic costs as additional outcomes. Displaced migrant workers do not encounter losses in terms of longer unemployment spells or wage penalties, while urban displaced workers incur very large costs in terms of these two outcomes. These results point to segmented urban labor markets in China. All displaced workers have an increased likelihood of being informal, while only migrants among the displaced experience a lowered incidence of self-employment. Also, health costs and psychic costs can be linked to displacement although these costs are not prevalent in a uniform fashion. Stratification of the data by gender, level of development and ownership seems important as it shows substantial heterogeneity of the costs of job loss across these dimensions.

Keywords: propensity score matching, worker displacement, costs of job loss, China

JEL Classification: J64, J65, P50

Suggested Citation

Ge, Yuhao and Lehmann, Hartmut F., The Costs of Worker Displacement in Urban Labor Markets of China. IZA Discussion Paper No. 7327, Available at SSRN: https://ssrn.com/abstract=2250326

Yuhao Ge (Contact Author)

Renmin University of China

Hartmut F. Lehmann

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
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IZA Institute of Labor Economics

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