Labor Market Dynamics and Structural Change: Evidence from China

Abstract

Structural change theories usually assume agents are homogeneous. However, because of demand‐side or supply‐side heterogeneities, the probability of switching among sectors differs across people. This paper reveals these differences through restoring a long‐period, individual‐level panel dataset from China's Urban Household Survey for 1986–2009. We find that both for people who started working for the first time and those who switched jobs, the sector choice depends on personal characteristics. In particular, women and people with higher educational attainment or a previous white‐collar job are more likely to join the tertiary sector and less likely to join the primary sector. These effects are substantial even if the macroeconomic variables used in conventional structural change theories are controlled. They are also robust in various periods and at more detailed industry levels. Our research suggests that it is important to pay greater attention to the labor composition when making policy related to economic structural change.

How Does Trade Openness Affect Regional Demographic Transitions? Evidence from China's Provincial Panel Data

“…This conclusion is consistent with Galor and Mountford (2008). with higher educational attainment are more likely to join the tertiary sector (Mao and Xu, 2015). The coefficients of urbanization are all positive at the 1-percent significance level.…”

The two‐way interaction between population aging and industrial transformation

“…Regarding (2), while transitions towards both secondary and tertiary sectors could induce inflows of young workers, the relative effectiveness between the two sectors in attracting labour depends on two competing forces. First, per Mao and Xu (2015) and Koeber and Wright (2001), the demand for young workers is relatively higher in the secondary sector than in the tertiary sector, suggesting more young-worker inflows if the secondary sector expands relative to the tertiary sector. However, per the 'vote by foot' theory (Tiebout, 1956), validated by the evidence that public services, social institutions and environmental quality are crucial determinants of the migration decision (Bayoh et al, 2006;Dahlberg et al, 2012), developing the tertiary sector could exhibit a greater effect to induce labour inflows.…”