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China's Labor Market Performance and Challenges

Author

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  • Tao Ran
  • Mr. R. Brooks

Abstract

A more market-oriented labor market has emerged in China in the past twenty years with growing importance of the urban private sector, as state-owned enterprises have downsized. Despite the progress on reforms, a sizable surplus of labor still exists in the rural sector and state-owned enterprises. The main challenge facing China’s labor market in coming years is to absorb the surplus labor into quality jobs while adjusting to World Trade Organization (WTO) accession. This paper estimates that if annual GDP growth averages 7 percent and the employment elasticity is one-half, urban unemployment could double to about 10 percent over the next three to four years. These pressures would be limited by stronger economic growth, especially in the private sector and more labor-intensive service industries which have generated the most jobs in recent years. Therefore, policy should focus on encouraging private sector development while reducing barriers to labor mobility, improving worker skills, upgrading job search services, and strengthening the social safety net.

Suggested Citation

  • Tao Ran & Mr. R. Brooks, 2003. "China's Labor Market Performance and Challenges," IMF Working Papers 2003/210, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/210
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    References listed on IDEAS

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    1. Li Shantong & Zhai Fan, 2002. "China's WTO Accession and Implications for its Regional Economies," Economie Internationale, CEPII research center, issue 92, pages 67-102.
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    Cited by:

    1. Girma, Sourafel & Gong, Yundan, 2008. "Putting people first? Chinese state-owned enterprises' adjustment to globalisation," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 573-585, March.
    2. Campos, Nauro F. & Nugent, Jeffrey B., 2012. "The Dynamics of the Regulation of Labor in Developing and Developed Countries since 1960," IZA Discussion Papers 6881, Institute of Labor Economics (IZA).
    3. Mr. Leslie Lipschitz & Ms. Genevieve Verdier & Ms. Celine Rochon, 2008. "A Real Model of Transitional Growth and Competitiveness in China," IMF Working Papers 2008/099, International Monetary Fund.
    4. Ryota Kojima & Shinya Nakamura & Shinsuke Ohyama, 2005. "Inflation Dynamics in China," Bank of Japan Working Paper Series 05-E-9, Bank of Japan.
    5. Eduardo Lora, 2005. "Should Latin America Fear China?," Research Department Publications 4409, Inter-American Development Bank, Research Department.
    6. Granville, Brigitte & Mallick, Sushanta & Zeng, Ning, 2011. "Chinese exchange rate and price effects on G3 import prices," Journal of Asian Economics, Elsevier, vol. 22(6), pages 427-440.
    7. Morris Goldstein, 2004. "Adjusting China's Exchange Rate Policies," Working Paper Series WP04-1, Peterson Institute for International Economics.
    8. Eduardo Lora, 2005. "Debe América Latina temerle a la China?," Research Department Publications 4410, Inter-American Development Bank, Research Department.
    9. He, Yuqian & Tang, Song & Wang, Lanfang & Wang, Susheng & Yu, Tao, 2024. "Private equity market development, state ownership, and firm innovation: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 958-985.
    10. Abrigo, Michael Ralph M. & Desierto,Desiree A., 2011. "Contagious Migration: Evidence from the Philippines," Discussion Papers DP 2011-18, Philippine Institute for Development Studies.
    11. Lipschitz, Leslie & Rochon, Céline & Verdier, Geneviève, 2011. "A real model of transitional growth and competitiveness in China," Journal of Asian Economics, Elsevier, vol. 22(4), pages 267-283, August.
    12. Lili Jia & Martin Petrick, 2014. "How does land fragmentation affect off-farm labor supply: panel data evidence from China," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 369-380, May.
    13. Golley, Jane & Meng, Xin, 2011. "Has China run out of surplus labour?," China Economic Review, Elsevier, vol. 22(4), pages 555-572.

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