The Impact of China's Millennium Labour Restructuring Program on Firm Performance and Employee Earnings
Around the turn of the century, China experienced perhaps the largest labour restructuring program in the world. This paper uses a new dataset of Chinese industrial enterprises to examine what leads to downsizing, and tries to understand the effects of labour downsizing on firms' technical efficiency, financial performance and employee wages. We find that downsizing is more prevalent in state-owned enterprises (SOEs), and is more likely when enterprises are older, larger and have higher excess capacity. For both SOEs and private firms, downsizing is more likely when the prices of their products drop, but private firms respond more dramatically. Moreover, downsizing has serious short-term costs in terms of total factor productivity (TFP). For mild downsizing, private firms suffer more deterioration in productivity. The distribution of surplus after downsizing is more favourable to labour in SOEs. For severe downsizing, both SOEs and private firms exhibit lower TFP growth with similar magnitudes. Our findings imply that private firms emphasize profit goals, while SOEs place a greater weight on labour protection.
| Main Authors: | , |
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| Format: | Journal Article biblioteca |
| Language: | EN |
| Published: |
2008
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| Subjects: | Labor Turnover, Vacancies, Layoffs J630, Firm Performance: Size, Diversification, and Scope L250, Socialist Systems and Transitional Economies: Factor and Product Markets, Industry Studies, Population P230, Socialist Enterprises and Their Transitions P310, |
| Online Access: | http://hdl.handle.net/10986/5671 |
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