Working Paper: NBER ID: w19733
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 Demand; Private Sector; Urban China
JEL Codes: J21; O18; P23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Housing Reform (R28) | Increased Labor Supply to Private Sector (J49) |
| Increased Labor Supply (J20) | Reduced Wages in Private Sector (J38) |
| Increased Labor Supply (J20) | Increased Labor Demand Elasticity (J23) |
| Housing Reform (R28) | Equalized Wages Across Sectors (J31) |
| Housing Reform (R28) | Reduced Private Sector Rents (R21) |