Economic Transition and Private-Sector Labor Demand: Evidence from Urban China
54 Pages Posted: 2 Jun 2014
Date Written: January 2014
This paper studies the policy determinants of economic transition and estimates the 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. Using the reform to instrument for private-sector labor supply, we find that private-sector labor demand is very elastic. We provide suggestive evidence that the reform equalized wages across sectors and reduced private-sector rents.
Keywords: Economic Transition, Labor Mobility, Structural Change
JEL Classification: J23, O12, P2, P26
Suggested Citation: Suggested Citation