When the Bureaucrats Move out of Business A Cost-Benefit Assessment of Labor Retrenchment in China
When the Bureaucrats Move out of Business: A Cost-Benefit Assessment of Labor Retrenchment in China

May 2000 - Reformers of China's state enterprises should realize that more could be realized from capital transfer than is being gained from labor retrenchment. And more efficient capital allocation, by reducing the pressure on labor, would bring larger gains at a lower social cost. Chen and Di...

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Bibliographische Detailangaben
1. Verfasser: Chen, Yi (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C The World Bank 1999
Schlagworte:
Economic Growth
Economic Theory and Research
Finance and Financial Sector Development
Financial Literacy
High Wages
Job
Job Creation
Jobs
Labor
Labor Force
Labor Market
Labor Markets
Labor Policies
Labor Productivity
Labor Redeployment
Macroeconomics and Economic Growth
Municipal Financial Management
Open Unemployment
Previous Results
Private Enterprise
Private Sector
Private Sector Activity
Private Sectors
Production Function
Public Sector Economics and Finance
Social Protections and Labor
State Owned Enterprise Reform
State-Owned Enterprises
Unemployment
Urban Development
Worker
Workers
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Zusammenfassung:May 2000 - Reformers of China's state enterprises should realize that more could be realized from capital transfer than is being gained from labor retrenchment. And more efficient capital allocation, by reducing the pressure on labor, would bring larger gains at a lower social cost. Chen and Diwan estimate the costs and benefits of labor retrenchment in state-owned industrial enterprises in China. Their results indicate the prevalence of low and stagnant labor productivity, low capital productivity, and excessively high wages in the state sector for the period reviewed (1994-97). The private sector exhibited consistently greater productivity. The authors' most striking finding: A greater gain could be realized from capital transfer than is being gained from labor retrenchment. Their simulation results for 1996 estimate that 43 percent of the workers in state enterprises and 70 percent of the capital are redundant. By itself, a transfer of labor from the public to the private sector at the current magnitude (20 percent of the labor force) would secure only 2 percent gains in output. A transfer of 10 percent of both capital and labor would achieve a greater efficiency gain than transferring the full 43 percent of redundant workers. This is partly because the private sector uses capital more efficiently than the public sector and partly because it needs capital to hire workers transferred from the public sector. Their results suggest that reform in state enterprises should concentrate more on the efficiency of capital allocation, not just on labor retrenchment. More efficient capital allocation would reduce the pressure on labor and would bring larger gains at a lower social cost.
[Fortsetzung 1. Abstract] This paper - a product of the Economic Policy and Poverty Reduction Division, World Bank Institute - is part of a larger effort in the institute to study the architecture of reform. The authors may be contacted at ychen@dol.eta.gov or idiwan@worldbank.org
Beschreibung:1 Online-Ressource (1 online resource (48 p.))
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