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How Does China's New Labour Contract Law Affect Floating Workers?

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  • Xiaoying Li
  • Richard B. Freeman

Abstract

China's new Labor Contract Law took effect on January 2008 and required firms to give migrant workers written contracts, strengthened labor protections for workers and contained penalties for firms that did not follow the labor code. This paper uses survey data of migrant workers in the Pearl River Delta before and after the law and a retrospective question on when workers received their first labor contract to assess the effects of the law on labor outcomes. The evidence shows that the new law increased the percentage of migrant workers with written contracts, which in turn raised social insurance coverage, reduced the likelihood of wage arrears, and raised the likelihood that the worker had a union at their workplace.
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Suggested Citation

  • Xiaoying Li & Richard B. Freeman, 2015. "How Does China's New Labour Contract Law Affect Floating Workers?," British Journal of Industrial Relations, London School of Economics, vol. 53(4), pages 711-735, December.
    • Handle: RePEc:bla:brjirl:v:53:y:2015:i:4:p:711-735
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    Cited by:

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    2. Elena Bárcena‐Martin & Jacques Silber & Yuan Zhang, 2024. "Measures of Relative and Absolute Convergence and Pro‐poor Growth with an Illustration based on China (2010–2018)," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 32(2), pages 1-41, March.
    3. Jiang, Jiaoliang & Chen, Yulin, 2021. "How does labor protection influence corporate risk-taking? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    4. Akee, Randall & Zhao, Liqiu & Zhao, Zhong, 2019. "Unintended consequences of China's new labor contract law on unemployment and welfare loss of the workers," China Economic Review, Elsevier, vol. 53(C), pages 87-105.
    5. Li, Guangzhong & Egger, Peter H. & Li, Jie & Wu, Han, 2022. "Exporting firms’ factor and product-quality adjustments in response to employment protection legislation: Evidence from China," China Economic Review, Elsevier, vol. 73(C).
    6. Karin Sanders & Julie A. Cogin & Cai-Hui Veronica Lin, 2017. "Methodological choices of HR research conducted in Asia," Frontiers of Business Research in China, Springer, vol. 11(1), pages 1-15, December.
    7. Gao, Yihong & Gao, Jiayan, 2023. "Employee protection and trade credit: Learning from China's social insurance law," Economic Modelling, Elsevier, vol. 127(C).
    8. Shenghua Xie & Juan Chen & Veli-Matti Ritakallio & Xiangming Leng, 2021. "Welfare migration or migrant selection? Social insurance participation and rural migrants’ intentions to seek permanent urban settlement in China," Urban Studies, Urban Studies Journal Limited, vol. 58(10), pages 1983-2003, August.
    9. Enying Zheng & Simon Deakin, 2016. "State and Knowledge Production: Industrial Relations Scholarship under Chinese Capitalism," Working Papers wp480, Centre for Business Research, University of Cambridge.
    10. Joshua Hall & Yang Zhou, 2017. "The Sinuous Dragon: Economic Freedom and Economic Growth in China," Working Papers 17-12, Department of Economics, West Virginia University.
    11. Kang, Yankun & Liang, Shuyuan & Bai, Caiquan & Feng, Chen, 2020. "Labor contracts and parents’ educational expectations for children: Income effect or expected effect?," Children and Youth Services Review, Elsevier, vol. 118(C).
    12. Simon Deakin & Shelley Marshall & Sanjay Pinto, 2020. "Labour Laws, Informality, and Development: Comparing India and China," Working Papers wp518, Centre for Business Research, University of Cambridge.
    13. Kieu‐Dung Nguyen & Duc‐Thanh Nguyen & Duy‐Dat Nguyen & Van‐Anh Thi Tran, 2021. "Labour law reform and labour market outcomes in Vietnam," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 8(2), pages 299-326, May.
    14. Enying Zheng & Simon Deakin, 2016. "Pricing Labour Capacity: The Unexpected Effects of Formalizing Employment Contracts in China," Working Papers wp479, Centre for Business Research, University of Cambridge.
    15. Li, Jianqiang & Shan, Yaowen & Tian, Gary & Hao, Xiangchao, 2020. "Labor cost, government intervention, and corporate innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 64(C).
    16. Li, Xiaoying & Shi, Dongbo & Zhou, Sifan, 2023. "The minimum wage and the locations of new business entries in China: Estimates based on a refined border approach," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    17. Pamela Lenton & Lu Yin, 2016. "The Educational Success of China’s Young Generation of Rural-to-Urban Migrants," Working Papers 2016007, The University of Sheffield, Department of Economics.
    18. Li, Zheng & Gao, Shan & Song, Shunfeng, 2023. "Labor protection, labor costs, and China's outward foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 444-459.
    19. Ni, Xiaoran & Zhu, Weikang, 2018. "The bright side of labor protection in emerging markets: The case of firm transparency," Pacific-Basin Finance Journal, Elsevier, vol. 50(C), pages 126-143.
    20. Fuxi Wang & Bernard Gan & Yanyuan Cheng & Lin Peng & Jiaojiao Feng & Liquian Yang & Yiheng Xi, 2019. "China’s Employment Contract Law: Does it deliver employment security?," The Economic and Labour Relations Review, , vol. 30(1), pages 99-119, March.
    21. Qin Gao & Sui Yang & Fuhua Zhai & Yake Wang, 2017. "Social Policy Reforms and Economic Distances in China, 2002-2013," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 201722, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    22. Chen, Yiu Por (Vincent) & Zhang, Yuan, 2018. "A decomposition method on employment and wage discrimination and its application in urban China (2002–2013)," World Development, Elsevier, vol. 110(C), pages 1-12.
    23. Haining Wang & Fei Guo & Zhiming Cheng, 2015. "A distributional analysis of wage discrimination against migrant workers in China’s urban labour market," Urban Studies, Urban Studies Journal Limited, vol. 52(13), pages 2383-2403, October.
    24. Cheng, Zhiming, 2022. "Communist Party branch and labour rights: Evidence from Chinese entrepreneurs," China Economic Review, Elsevier, vol. 71(C).

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    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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