Political economy of labor retrenchment : evidence based on China's state-owned enterprises

Yifan HU, Sonja OPPER, Man Lai, Sonia WONG

Research output: Journal PublicationsJournal Article (refereed)peer-review

8 Citations (Scopus)


This study examines the determinants behind the restructuring of China's SOEs in the late 1990s. We have reached two major findings. First, we find that the degree of labor retrenchment is negatively related to enterprise performance, suggesting that poor performance is a major force driving labor restructuring. Second, we offer evidence that decisions on labor retrenchment in traditional SOEs are related to the local government's fiscal position and to local reemployment conditions for laid-off workers. In contrast, labor decisions in corporatized SOEs are not related to these two variables. Our results suggest that corporatized SOEs with partial private ownership may enjoy higher autonomy in labor decisions.
Original languageEnglish
Pages (from-to)281-299
Number of pages19
JournalChina Economic Review
Issue number3
Publication statusPublished - 1 Jan 2006
Externally publishedYes

Bibliographical note

Paper presented at the Summer Conference of the Chinese-Economists-Society on Technoloyg, Human Capital and Economic Development, Jul 30-31, 2004, Atlanta, Georgia.


  • Labor restructuring
  • Political control
  • State owned enterprises


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