China’s Labor Market in Seven Decades

Wu Yaowu (吴要武)*

The Institute of Population and Labor Economics, Chinese Academy of Social Sciences (IPLE-CASS);

School of Economics, University of Chinese Academy of Social Sciences (UCASS), Beijing, China

Abstract: Soon after its founding in 1949, the People’s Republic of China establishedan all-round planned economic system, abolished the labor market, put labor authoritiesin charge of urban employment planning and placements, and assigned rural workforceas members of the People’s Communes. This planned labor system lasted until the reformand opening up program was launched in 1978. In the face of great employment pressuresas educated youth returned from the countryside to cities, the government took a seriesof policies to bring the educated youth into the workforce through referral by laborauthorities, voluntarily organized employment, and self-employment. With the abolition ofthe centralized job placement system, China’s labor market started to develop, giving playto the comparative advantage of abundant labor force, and the dual economic structurestarted to integrate. After decades of rapid growth and job creation, China’s labor markethave turned from oversupply to undersupply since 2003, and labor remuneration increasedsharply. China’s changing resource endowment structure was accompanied by a shift in itslabor market policy from employment to the labor market. Over the past four decades ofreform and opening up, the Chinese government enacted wise labor market policies in eachcritical stage.

Keywords: Labor market, labor supply, labor demand

JEL Classification Codes: J24, J23

DOI: 10.19602/j.chinaeconomist.2022.01.05