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STRUCTURAL CHANGE AND AGGREGATE EMPLOYMENT FLUCTUATIONS IN CHINA
Author(s) -
Yao Wen,
Zhu Xiaodong
Publication year - 2021
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12486
Subject(s) - economics , china , volatility (finance) , aggregate (composite) , monetary economics , aggregate income , agriculture , labour economics , econometrics , income distribution , mathematical analysis , ecology , materials science , mathematics , inequality , political science , law , composite material , biology
Abstract In developed countries, aggregate employment is strongly procyclical and almost as volatile as output. In China, the correlation of aggregate employment and output is close to zero, and the volatility of aggregate employment is very low. We argue that the key to understanding aggregate employment fluctuations in China is labor reallocation between the agricultural and nonagricultural sectors, and that the income effect plays an important role in determining the labor reallocation dynamics in both the long run and short run.