NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Dynamic Labor Demand in China: Public and Private Objectives

Russell Cooper, Guan Gong, Ping Yan

NBER Working Paper No. 16498
Issued in October 2010
NBER Program(s):   EFG

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.

download in pdf format
   (348 K)

email paper

This paper is available as PDF (348 K) or via email.

This paper was revised on April 2, 2013

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16498

Users who downloaded this paper also downloaded these:
Cooper, Gong, and Yan w19324 Costly Labor Adjustment: General Equilibrium Effects of China's Employment Regulations
Cooper, Gong, and Yan w17948 Costly Labor Adjustment: Effects of China's Employment Regulations
Whalley and Zhao w16592 The Contribution of Human Capital to China's Economic Growth
Bonaparte, Cooper, and Zhu w16957 Consumption Smoothing and Portfolio Rebalancing: The Effects of Adjustment Costs
Cooper and Ejarque w8182 Exhuming Q: Market Power vs. Capital Market Imperfections
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us