Long Run Trends in Unemployment and Labor Force Participation in China

46 Pages Posted: 18 Aug 2015 Last revised: 22 Aug 2021

See all articles by Shuaizhang Feng

Shuaizhang Feng

Shanghai University of Finance and Economics - Department of Economics; Princeton University; IZA Institute of Labor Economics

Yingyao Hu

Johns Hopkins University - Department of Economics

Robert A. Moffitt

Johns Hopkins University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2015

Abstract

Unemployment rates in countries across the world are typically positively correlated with GDP. China is an unusual outlier from the pattern, with abnormally low, and suspiciously stable, unemployment rates according to its official statistics. This paper calculates, for the first time, China’s unemployment rate from 1988 to 2009 using a more reliable, nationally representative household survey in China. The unemployment rates we calculate differ dramatically from those supplied in official data and are much more consistent with what is known about China’s labor market and how it has changed over time in response to structural changes and other significant events. The rate averaged 3.9% in 1988-1995, when the labor market was highly regulated and dominated by state-owned enterprises, but rose sharply during the period of mass layoff from 1995- 2002, reaching an average of 10.9% in the subperiod from 2002 to 2009. We can also calculate labor force participation rates, which are not available in official statistics at all. We find that they declined throughout the whole period, particularly in 1995-2002 when the unemployment rate increased most significantly. We also report results for different demographic groups, different regions, and different cohorts.

Suggested Citation

Feng, Shuaizhang and Hu, Yingyao and Moffitt, Robert, Long Run Trends in Unemployment and Labor Force Participation in China (August 2015). NBER Working Paper No. w21460, Available at SSRN: https://ssrn.com/abstract=2645556

Shuaizhang Feng (Contact Author)

Shanghai University of Finance and Economics - Department of Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Princeton University

22 Chambers Street
Princeton, NJ 08544-0708
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Yingyao Hu

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States

Robert Moffitt

Johns Hopkins University - Department of Economics ( email )

Baltimore, MD 21218-2685
United States
410-516-7611 (Phone)
410-516-7600 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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