Working Paper: CEPR ID: DP9794
Authors: Lakshmi Iyer; Xin Meng; Nancy Qian; Xiaoxue Zhao
Abstract: 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.
Keywords: economic transition; labor mobility; structural change
JEL Codes: J23; O12; P2; P26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| housing reform (R28) | private sector labor supply (J45) |
| private sector labor supply (J45) | private sector wages (J39) |
| housing reform (R28) | private sector wages (J39) |
| private sector labor supply (J45) | labor demand elasticity (J23) |