China’s Labor Market in the “New Normal”

IMF Working Papers, July 13, 2015

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China’s Labor Market in the “New Normal”

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Bibliographic details

• Authors: Waikei R Lam, Xiaoguang Liu, Alfred Schipke
• Published: July 13, 2015
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781513570693.001

Summary findings

• As China implements reforms under the “new normal,” maintaining stability in the labor market is a priority.
• The country’s demography and labor dynamics are changing after benefitting in past decades from ample cheap labor.
• So far, the labor market appears to be resilient, even as growth slows, driven in part by expansion of the services sector.
• Migrant flows and possible labor hoarding in overcapacity sectors may help explain continued labor market stability.
• Migrant flows and labor hoarding serve as short-term shock absorbers but, if persistent, may:
  • Delay the needed adjustment process.
  • Contribute to an inefficient allocation of resources.
  • Curtail productivity gains.

Quantitative focus and scenarios

• The paper quantifies to what extent structural trends and the reform pace affect employment growth under the new normal.
• Delays in reform implementation would:
  • Weaken growth prospects in the medium term.
  • Run the risk that job creation will fall below policy targets.
  • Lead to labor market pressures in the future.
• Successful transition scenario would require faster reforms, including in the overcapacity and state-owned enterprise sectors, supported by well targeted social safety nets.

Policy implications and recommendations

• Accelerate reforms in overcapacity sectors to avoid prolonged labor hoarding and inefficiencies.
• Advance reforms in state-owned enterprise sectors to facilitate reallocation and productivity gains.
• Implement well targeted social safety nets to support workers during transition and to cushion short-term shocks.

Publication and metadata

• Authors: Waikei Raphael Lam, Xiaoguang Liu, Alfred Schipke
• Publication date: July 13, 2015
• Series: Working Paper No. 2015/151
• Issue: 151
• Volume: 2015
• Pages: 34
• DOI: https://doi.org/10.5089/9781513570693.001
• Stock No: WPIEA2015151
• ISBN: 9781513570693
• ISSN: 1018-5941
• Also available in 中文
• Subjects: Economic sectors, Employment, Labor, Labor markets, Migration, Population and demographics, Services sector, Unemployment rate
• Keywords: China, Employment, Global, growth rate, labor market, labor market condition, labor market mobility, labor market resilience, Labor Markets, Migration, Mobility, per capita income, productivity gain, Services sector, Unemployment, WP

Source: IMF Working Paper “China’s Labor Market in the “New Normal””, Waikei Raphael Lam, Xiaoguang Liu, Alfred Schipke, July 13, 2015.

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