Informal Employment in China: Trends, Patterns and Determinants of Entry

34 Pages Posted: 22 Aug 2016

See all articles by Zhe Liang

Zhe Liang

University of Nottingham

Simon Appleton

University of Nottingham - School of Economics

Lina Song

University of Nottingham - School of Sociology and Social Policy

Abstract

We empirically deconstruct informal employment in China into private business owners and casual workers without job contracts. Survey data from 2007 and 2013 document a rise in informal employment to the point where it exceeds formal employment, potentially an unintended consequence of the 2008 New Labour Contract Law. Compared with formal employees and business owners, casual workers report the lowest monetary and subjective wellbeing although business owners work longer hours with less social protection. Descriptive statistics and multivariate modelling reveal formal employees tend to have more favoured characteristics, often being educated, male, healthy and able bodied. Casual workers are more likely to have the characteristics of vulnerable groups, so the growth of casual employment is particularly concerning. There are indications that running small business is not always a sign of vulnerability and it may provide job flexibility for those with dependents to care for.

Keywords: informal employment, determinants, human capital, China

JEL Classification: D03, J46, O15, P23, P36

Suggested Citation

Liang, Zhe and Appleton, Simon and Song, Lina, Informal Employment in China: Trends, Patterns and Determinants of Entry. IZA Discussion Paper No. 10139. Available at SSRN: https://ssrn.com/abstract=2826973

Zhe Liang (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Simon Appleton

University of Nottingham - School of Economics ( email )

University Park
Nottingham NG7 2RD
United Kingdom

Lina Song

University of Nottingham - School of Sociology and Social Policy ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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