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Economic Transition and Private-Sector Labor Demand: Evidence from Urban China

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  • Lakshmi Iyer
  • Xin Meng
  • Nancy Qian
  • Xiaoxue Zhao

Abstract

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.

Suggested Citation

  • Lakshmi Iyer & Xin Meng & Nancy Qian & Xiaoxue Zhao, 2013. "Economic Transition and Private-Sector Labor Demand: Evidence from Urban China," NBER Working Papers 19733, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19733
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    2. Chen, Yuyu & Naidu, Suresh & Yu, Tinghua & Yuchtman, Noam, 2015. "Intergenerational mobility and institutional change in 20th century China," Explorations in Economic History, Elsevier, vol. 58(C), pages 44-73.
    3. Anton Cheremukhin & Mikhail Golosov & Sergei Guriev & Aleh Tsyvinski, 2015. "The Economy of People’s Republic of China from 1953," NBER Working Papers 21397, National Bureau of Economic Research, Inc.
    4. Guriev, Sergei & Cheremukhin, Anton & Golosov, Mikhail & Tsyvinski, Aleh, 2015. "The Economy of People’s Republic of China from 1953," CEPR Discussion Papers 10764, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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