nep-cna New Economics Papers
on China
Issue of 2012‒01‒18
two papers chosen by
Zheng Fang
Ohio State University

  1. Adjusting to Really Big Changes: The Labor Market in China, 1989-2009 By Wei Chi; Richard B. Freeman; Hongbin Li
  2. Contractual Versus Non-Contractual Trade: The Role of Institutions in China By Robert C. Feenstra; Chang Hong; Hong Ma; Barbara J. Spencer

  1. By: Wei Chi; Richard B. Freeman; Hongbin Li
    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.
    JEL: J3
    Date: 2012–01
  2. By: Robert C. Feenstra; Chang Hong; Hong Ma; Barbara J. Spencer
    Abstract: Recent research has demonstrated the importance of institutional quality at the country level for both the volume of trade and the ability to trade in differentiated goods that rely on contract enforcement. This paper takes advantage of cross-provincial variation in institutional quality in China, and export data that distinguishes between foreign and domestic exporters and processing versus ordinary trade, to show that institutional quality is a significant factor in determining Chinese provincial export patterns. Institutions matter more for processing trade, and more for foreign firms, just as we would expect from a greater reliance on contracts in these cases.
    JEL: F13
    Date: 2012–01

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