Dynamic Labor Demand in China: Public and Private Objectives / Russell Cooper, Guan Gong, Ping Yan.

Format:

Book

Author/Creator:

Cooper, Russell.

Contributor:

National Bureau of Economic Research.

Gong, Guan.

Yan, Ping.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16498.

NBER working paper series no. w16498

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Dynamic Labor Demand in China

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

This paper studies dynamic labor demand by private and public manufacturing plants in China. It contributes along two dimensions. First, it uncovers the objectives of public enterprises and compares them to private enterprises. Second, it estimates adjustment costs of these plants and thus their (dynamic) labor demand. One of our principal findings is that public plants maximize the discounted present value of profits without a soft-budget constraint. There is strong evidence of both quadratic and linear firing costs at the plant level. Costs of adjusting hours are small and lower for private compared to public plants. The private plants operate with considerably lower quadratic adjustment costs. The higher quadratic adjustment costs of the public plants may reflect their internalization of social costs of employment adjustment. Domestic private plants and collective plants have about the same discount factor, much lower than state controlled plants.

Notes:

Print version record

October 2010.