Unemployment in the Process of Economic Development in China

Yanbing Mao

ISBN 978-3-8325-1929-2
260 pages, year of publication: 2008
price: 40.50 €

China has experienced rapid economic growth since the economic reform in the late 1970s. Whether economic growth can always bring about corresponding employment growth or decreasing in unemployment becomes am important issue on analyzing the recent problem of increasing in the unemployment rate in China. This book has examined the issue of unemployment and the emergence of the modern labour market in the process of economic development of China.

The Lewis Model and the Harris-Todaro Model as well as the Neo-Schumpeterian theories regarding technological progress and searching-matching approaches supply theoretical framework for analyzing the causes of unemployment in China. A typical dual economic structure determines a large scale of migration from rural to urban areas with the significant development of agricultural economy and industrialization. In the process of transformation from centrally planed economy to market economy, a large number of redundant workers were released from the state owed enterprises. Due to the peak of labour force population, young labour entrants additionally enhanced the pressure of employment.

In essence, The Chinese economic development has been in an unprecedented period of large scale structural adjustment. Technological progress is regarded as the motivation of economic growth and structural adjustment. A so-called "creative destruction effect" enhanced mismatching between labour supply and labour demand, which induced increasing in unemployment in the modern labour market. Therefore, economic growth does not necessarily bring about employment growth, but even increases the level of unemployment in a certain period. In a medium- and long term, the issue of unemployment in China is mainly caused by structural factors.