Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/196668 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12170
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper studies the effect of state-owned enterprises on the dynamics of the Chinese urban labor market. Using longitudinal monthly panel data, we document very low dynamics in the labor market, especially in the state sector. We develop and calibrate an equilibrium search and matching model with three differences between the state and the non-state sector: labor productivity, labor adjustment cost, and workers' bargaining power. Counterfactual analysis shows that the lack of dynamics is mainly driven by the strong bargaining power of state-sector workers. Eliminating the differences between the two sectors substantially reduces the unemployment rate and long-term unemployment rate.
Subjects: 
state sector
labor market dynamics
search and matching
China
long-term unemployment
JEL: 
J64
J45
P23
Document Type: 
Working Paper

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