abstract: 'Over the past few decades of economic reform, China''s labor markets have

  been transformed to an increasingly market-driven system. China has two

  segregated economies: the rural and urban. Understanding the shifting

  nature of this divide is probably the key to understanding the most

  important labor market reform issues of the last decades and the decades

  ahead. From 1949, the Chinese economy allowed virtually no labor

  mobility between the rural and urban sectors. Rural-urban segregation

  was enforced by a household registration system called ``hukou.{''''}

  Individuals born in rural areas receive ``agriculture hukou{''''} while

  those born in cities are designated as ``nonagricultural hukou.{''''} In

  the countryside, employment and income were linked to the commune-based

  production system. Collectively owned communes provided very basic

  coverage for health, education, and pensions. In cities, state-assigned

  life-time employment, centrally determined wages, and a cradle-to-grave

  social welfare system were implemented. In the late 1970s, China''s

  economic reforms began, but the timing and pattern of the changes were

  quite different across rural and urban labor markets. This paper focuses

  on employment and wages in the urban labor markets, the interaction

  between the urban and rural labor markets through migration, and future

  labor market challenges. Despite the remarkable changes that have

  occurred, inherited institutional impediments still play an important

  role in the allocation of labor; the hukou system remains in place, and

  72 percent of China''s population is still identified as rural hukou

  holders. China must continue to ease its restrictions on rurala is an

  element of urban migration, and must adopt policies to close the

  widening rural-urban gap in education, or it risks suffering both a

  shortage of workers in the growing urban areas and a deepening

  urban-rural economic divide.'
affiliation: 'Meng, X (Corresponding Author), Australian Natl Univ, Res Sch Econ,
  Coll Business \& Econ, Canberra, ACT, Australia.

  Australian Natl Univ, Res Sch Econ, Coll Business \& Econ, Canberra, ACT, Australia.'
author: Meng, Xin
author-email: xin.meng@anu.edu.au
author_list:
- family: Meng
  given: Xin
da: '2023-09-28'
doi: 10.1257/jep.26.4.75
eissn: 1944-7965
files: []
issn: 0895-3309
journal: JOURNAL OF ECONOMIC PERSPECTIVES
keywords-plus: URBAN CHINA; EDUCATION; INEQUALITY; POLICY; INCOME
language: English
month: FAL
number: '4'
number-of-cited-references: '73'
pages: 75-101
papis_id: 8ea1f0abf2283c9b1b3a58adad9bdd64
ref: Meng2012labormarket
times-cited: '230'
title: Labor Market Outcomes and Reforms in China
type: article
unique-id: WOS:000310776500005
usage-count-last-180-days: '12'
usage-count-since-2013: '100'
volume: '26'
web-of-science-categories: Economics
year: '2012'