Lec 3 Labor Market

labor during the planned era (urban area)

since 1950

centralized allocation → under the sustem all workers and employers were matched to jobs by government labor bureaus

• rare job mobiliy

• wages were set by the state

planned era : the wages (urban area)

the standad at a subsistence level : urban workers were paid a subsistence wage, with certain benefits

the wage ladder : based on a classification system, by occupation region, industru, and type of workplace

→ distribution of wages was compressed and was not linked precisely to differences in individual productivity

→ labor concentration n SOE

labor before the reforms in rura area

agricultural labor were organized by agricultural collectives

→ organized the agricultural production and output allocation

→ each abled bodied worer was assigned a daily job by the collective, and labor was coordinated, individuals earned work points, and after the harvest was in, the total net income of the collective was distributed by wor points

→ rare non-agricultural work

→ low rural-urban mobility

the rural reforms

The Household Production responsibility System (1978)

• agricultural collectives → households (became relatively indepedent economic unit contracting the collective land)

• without restructions, rural labor also started to move into nonagricultural sectors for opportunitues

• → from agriculture to non-agriculture jobs

• later from rural to urban area

Urban area : the SOE reforms

wages : instead of a fixed wage ladder scheme, SOE’s started to link workers wages to firms profits (1984) → floating total wage system

employment : more decision making in firm hiring and layoffs,

rural urban mobility

relaxation of Hukou restrictions → with economic growth in the 1990s labor demand increased in many cities, encouraged rural-to-urban migrants

features of China’s current labor market

1) high labor force participation rate

2) employment diversification

3) increase in return to education

4) the rural-urban flow

5) others

rural-urban flow : skilled composition + sectors

young rural-to-urban migrants are universally literate, almost all have lower-middle school education, and a substantial proportion have high-school and college education

manufacturing (esp export oriented regions of th ecoast, + labor intensive factories)

construction

retail, food services, and household services

urban informal vs urban formal sector

informal : mostly migrants

• private, self-employed, and other firms

• most workers are not covered by social security

informal

• SOE’s, collective entreprises, overnment, and urban foreign invested firms

• almost all workers are covered by social securitu and other welfare provisions, and most have urban Hukou

migrant workers; job seeking

private networks, markets, online search h

the markets

• labor ‘gang’ leaders who recruit construction teams

• employments agents for big factories

• government-run employment centers