BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 29/2008:
China's new labour contract law: No harm to employment?
Yu-Fu Chen ()
and Michael Funke
Abstract: In January 2008, China adopted a new labour contract law.
This new law represents the most significant reform to the legislation on
employment relations in mainland China in more than a decade. The paper
provides a theoretical framework on the inter-linkages between labour
market regulation, option value and the choice and timing of employment.
All in all, the paper demonstrates that the Labour Contract Law in its own
right will have only small impacts upon employment in the fast-growing
Chinese economy. Rather, induced increasing unit labour costs represent the
real issue and may reduce employment.
Keywords: China; labour contract law; real options; employment; (follow links to similar papers)
JEL-Codes: C61; D81; D92; J23; (follow links to similar papers)
38 pages, December 20, 2008
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