Discussion paper

DP9794 Economic Transition and Private-Sector Labor Demand: Evidence from Urban China

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.

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Citation

Qian, N, and L Iyer (2014), ‘DP9794 Economic Transition and Private-Sector Labor Demand: Evidence from Urban China‘, CEPR Discussion Paper No. 9794. CEPR Press, Paris & London. https://cepr.org/publications/dp9794