How Productive is Chinese Labour? The Contributions of Labour Market Reforms, Competition and Globalisation
Productivity advances drive long-run economic growth, and a crucial factor is labour productivity improvements. The productivity of labour in China was marginally relevant in the pre-1978 period, but the picture has changed dramatically in the reform period due to numerous labour market reforms as well as radical changes in ownership structure whereby the dominance of state-owned enterprises has given way to the rise of private sector firms and globalisation. Using a national firm-level panel data set from 2000 to 2005, this paper hypothesises that labour productivity has improved as a result of labour market reforms, increased competition, and greater opening to the global economy, and finds that all of these factors to be important.
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