@article{0f3eb2676d4a41739b7e61218ae2410f,
title = "Costly Labour Adjustment: General Equilibrium Effects of China's Employment Regulations and Financial Reforms",
abstract = "This article studies the employment and productivity implications of new Chinese labour regulations. We estimate a general equilibrium model of costly labour adjustment from data prior to the policy to study the effects of the interventions. Increases in severance payments are particularly effective and lead to sizable private sector responses. If in place at the time, these frictions would have reduced China's annual growth rate by nearly 1 percentage point between 1998 and 2007, a period of intense privatisation. Credit market liberalisation reduces private firm size and increases private sector employment, labour reallocation, wages and output.",
author = "Russell Cooper and Guan Gong and Ping Yan",
note = "Funding Information: This research was supported by a National Science Foundation (#0819682) to Russell Cooper, a National Science Foundation of China grant (#70903004, #71273001) to Ping Yan and Russell Cooper, and a National Science Foundation of China grant (#71273162) to Guan Gong and Russell Cooper. This research is also supported by the Chinese Ministry of Education Key Research Base Project (#16JJD790002) to Russell Cooper and Ping Yan. The Department of Social Science of Peking University provided additional research funding. Huabin Wu provided outstanding research assistance on the initial phases of this project. Immo Schott contributed to further developing the code for the policy analysis. We are grateful to John Haltiwanger and Jonathan Willis for sharing code from an earlier joint project. We are grateful to seminar participants at the European University Institute, the University of Alicante, University of Cyprus, the Federal Reserve Bank of St. Louis, the University of Rochester and the Becker-Friedman Institute for helpful questions and comments. Comments and suggestions from Jeff Campbell, the referees and editor that substantially improved our analysis and discussion of results are gratefully acknowledged. 1 See the discussion in section VI of Hsieh and Klenow (2009). Publisher Copyright: {\textcopyright} 2017 Royal Economic Society",
year = "2018",
month = aug,
doi = "10.1111/ecoj.12528",
language = "English (US)",
volume = "128",
pages = "1879--1922",
journal = "Economic Journal",
issn = "0013-0133",
publisher = "Wiley-Blackwell",
number = "613",
}