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Embracing the Market: Entry into Self-Employment in Transitional China, 1978-1996

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  • Xiaogang Wu

Abstract

This paper introduces labor market transition as an intervening process by which the macro institutional transition to a market economy alters social stratification outcome. Rather than directly addressing income distribution, it examines the pattern of workers??? entry into self-employment in reform-era China (1978-1996), focusing on rural-urban differences and the temporal trend. Analyses of data from a national representative survey in China show that education, party membership and cadre status all deter urban workers??? entry into self-employment, while education promotes rural workers??? entry into self-employment. As marketization proceeds, the rate of entry into self-employment increases in both rural and urban China, but urban workers are increasingly more likely to take advantages of the new market opportunities. In urban China, college graduates and cadres are still less likely to be involved in self-employment, but they are becoming more likely to do so in the later phase of reform. The diversity of transition scenarios is attributed to rural-urban differences in labor market structures.

Suggested Citation

  • Xiaogang Wu, 2002. "Embracing the Market: Entry into Self-Employment in Transitional China, 1978-1996," William Davidson Institute Working Papers Series 512, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2002-512
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    References listed on IDEAS

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    1. Yingyi Qian, 1999. "The Process of China's Market Transition (1978-98): The Evolutionary, Historical, and Comparative Perspectives," Working Papers 99012, Stanford University, Department of Economics.
    2. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
    3. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    4. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    5. Victor R. Fuchs, 1980. "Self-Employment and Labor Force Participation of Older Males (Revised)," NBER Working Papers 0584, National Bureau of Economic Research, Inc.
    6. Zhao Renwei, 1993. "Three Features of the Distribution of Income during the Transition to Reform," Palgrave Macmillan Books, in: Keith Griffin & Zhao Renwei (ed.), The Distribution of Income in China, chapter 2, pages 74-92, Palgrave Macmillan.
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    Cited by:

    1. YUEH, Linda, 2009. "Self-employment in urban China: Networking in a transition economy," China Economic Review, Elsevier, vol. 20(3), pages 471-484, September.
    2. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Self-Employment in China: Are Rural Migrant Workers and Urban Residents Alike?," IZA Discussion Papers 7191, Institute of Labor Economics (IZA).
    3. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2003. "Entrepreneurship Selection and Performance," Tinbergen Institute Discussion Papers 03-046/3, Tinbergen Institute, revised 24 Sep 2004.
    4. Ana I. Moreno-Monroy & Shu Yu & Victoria Euse, 2016. "Urban Employment in Small Businesses and the Level of Economic Development: Evidence from Chinese Cities," Growth and Change, Wiley Blackwell, vol. 47(1), pages 53-71, March.
    5. Cathy Yang Liu & Xi Huang, 2016. "The Rise of Urban Entrepreneurs in China: Capital Endowments and Entry Dynamics," Growth and Change, Wiley Blackwell, vol. 47(1), pages 32-52, March.

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    More about this item

    Keywords

    Market; Rural China; Self-employment; Transition; and Urban China;
    All these keywords.

    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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