Economic Transition and Private-Sector Labor Demand: Evidence from Urban China

54 Pages Posted: 11 Dec 2013 Last revised: 14 Apr 2016

Lakshmi Iyer

Harvard Business School - Business, Government and the International Economy Unit

Xin Meng

Australian National University; IZA Institute of Labor Economics

Nancy Qian

Yale University - Department of Economics

Xiaoxue Zhao

Yale University - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: March 2016

Abstract

This paper studies the policy determinants of economic transition and estimates the elasticity demand for labor in the infant private sector in urban China. We show that a reform that untied access to housing in urban areas from working for the state sector accounts for more than a quarter of the overall increase in labor supply to the private sector during 1986-2005. We do not find any increase in self-employment. Using the reform to instrument for private-sector labor supply, we find that private-sector labor demand is very elastic, with elasticity estimates ranging between -3.1 and -5.3.

Keywords: Economic Transition, Structural Change, Labor Mobility

JEL Classification: O12, P2, P26, J23

Suggested Citation

Iyer, Lakshmi and Meng, Xin and Qian, Nancy and Zhao, Xiaoxue, Economic Transition and Private-Sector Labor Demand: Evidence from Urban China (March 2016). Harvard Business School BGIE Unit Working Paper No. 14-047. Available at SSRN: https://ssrn.com/abstract=2365524 or http://dx.doi.org/10.2139/ssrn.2365524

Lakshmi Iyer (Contact Author)

Harvard Business School - Business, Government and the International Economy Unit ( email )

Cambridge, MA
United States

Xin Meng

Australian National University ( email )

Research School of Economics
College of Business and Economics
Canberra ACT 0200
Australia
+61 26249 3102 (Phone)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Nancy Qian

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Xiaoxue Zhao

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

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