Type: Working Paper
Dynamic Labor Demand in China: Public and private objectives
Working Paper, NBER Working Paper, 2010/16498
COOPER, Russell, GONG, Guan, YAN, Ping, Dynamic Labor Demand in China: Public and private objectives, NBER Working Paper, 2010/16498 - https://hdl.handle.net/1814/21214
Retrieved from Cadmus, EUI Research Repository
This paper studies dynamic labor demand of private and state-controlled manufacturing plants in China. A goal of the paper is to characterize adjustment costs for these plants. As our sample includes private and state-controlled plants, our analysis uncovers differences in both objectives and adjustment costs across these types of plants. We find evidence of both quadratic and firing costs at the plant level. The private plants operate with lower quadratic adjustment costs. The higher quadratic adjustment costs of the state-controlled plants may reflect their internalization of social costs of employment adjustment. State-controlled plants appear to be maximizing the discounted present value of profits without a soft-budget constraint. Private plants discount the future more than state-controlled plants.
Issued in October 2010
Cadmus permanent link: https://hdl.handle.net/1814/21214
External link: http://www.nber.org/papers/w16498.pdf
Series/Number: NBER Working Paper; 2010/16498
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