Labor and Human Capital 中国经济发展与转型（英文版） 教学课件.ppt

Chinese Modern Economic History Labor and Human Capital Naughton, Chapter 8 Chinese Modern Economic History 8.1 Institutional Transformation Under the command economy, before 1978, there were no land markets in China, and no labor markets. What does this mean, no labor markets? -lifetime employment at one company or work unit -no one quit, no one was fired -the “iron rice bowl” -government selected your job and your career -basically, no one changed location outside the province Chinese Modern Economic History In Phase I of the economic transition, to about 1993, labor markets still did not operate to any great extent. the “reform without losers” phase In cities, nearly all employment in government, SOEs, or urban collectives No labor mobility - government selected career. That was it. Small changes during Phase I - five year contracts for new employees after 1986; some worker mobility within the urban area. Not much migration at this Phase- hukou regulations strict. Chinese Modern Economic History But the economic reform in the mid 1990s allowed, or forced, labor markets to begin operating. -50 million workers laid off (wu qian wen?) 50,000,000 -all forms of urban employment shrank quickly (24% of labor force in 1996 to 7% in 2003) -unemployment increased dramatically, as did labor mobility and the size of the “informal” sector -private sector employment increased dramatically -this is Phase 2, or “reform with losers” Chinese Modern Economic History As you know, such a large population in China creates serious challenges for economic development. -much physical labor substitutes for capital -people must have jobs, so they can eat -labor is very cheap -underemployment is common -overstaffing is common (but service levels can be high) Look at urban landscaping in China - along many roads -very beautiful, better than anywhere else I have seen -but why? Chinese Modern Economic History 8.2 Labo