Theoretical And Empirical Analysis Of Unemployment Problem During China's Economic Transitional Period

Unemployment Phenomenon is a worldwide problem. That's true for not only the developed countries, but for the developing countries or countries, especially for the transitional countries. With the deepening of reform and open policy, the economic structure has undergone unprecedented restructuring in the history of China. At the same time, large-scale unexpected unemployment problem begins to appear, which we called "flood of laid-off". It is worth to emphasize that our country has the most abundant supply of labor in the world, and it will be related to the social harmony and stability for a long time, as well as economic growth sustainability to put the wealth of labor resources into economic development. With the possession of largest labor resources in the world, the imperfect social security system, and Chinese enormous employment pressure, the dilemma of high growth with high unemployment rate will the generate some negative effects to our sustainable development of the national economy and social stability. For those manpower, to be unemployed is not only a huge waste of labor resources, but also affecting the sustainability of economic growth and the increasing of people's incomes. To some extent, unemployment will give rise to the dissatisfaction and turbulence of the masses of people, which is harmful to the social harmony. Therefore, employment problem is not only a comparatively prominent economic contradiction, but also an unstable social and political contradiction at this stage of China. Solution to this problem is a challenge for each country in the world. This is also the direct driving force for me to choose this research subject.In this dissertation, I grasp some important and basic transitional characteristics of China closely to spread out the analysis. The logical sequence is as follows. Through the induction and comparative analysis of three different paradigms about unemployment research, and the considerate observation of Chinese basic data, I calculate the real unemployment rate in urban areas and the number of rural surplus labors. After that I point out the potential seriousness of the unemployment problem, and then emphasize that the unemployment problem in our country is dissimilated with other countries. In my opinion, the dissimilation can be illustrated by the two characteristics as follows:Firstly, the curve of Okun's Law performs as an orbit of non-linear nature. First of all, I make a meticulous analysis of China's economic growth rate and its registered urban unemployment rate in this dissertation. From the overall description of the data, I get a basic conclusion that the increasing rate of GDP is not negative with urban registered unemployment rate, which means that "Okun's Law" has deviated from its traditional track in China. Then, on the basis of the non-symmetry hypothesis, and using the threshold estimation method and the HP filter analysis, I add the lagged items into the Okun's equation to construct an extension of the classical equation of Okun's Law. To be honest, this is a new method to inspect the real performance of Okun curve. One the use of China's increasing rate of registered urban unemployment and GDP from 1978 to 2007, the regress result reveals that the non-linear model is much better than the linear model. It is reasonable to believe that a kind of non-linear relationship is the related essence between economic growth and unemployment rate in China. That is to say, the Okun's Law is undergoing some stupendous distortion in our country's current economic transition.Secondly, the employment elasticity is irregularly and strongly fluctuant. In the three sections of our country, the employment elasticity of the secondly industry and the tertiary industry reflects the rule of high growth high employment and low growth low employment. However, with the capital deepening and technical progress, the capital investment brings less employment opportunities than before, and it also means that the employment elasticity of the capital is declining gradually. In recent years, China's foreign direct trade has been growing fast, but its ability to provide job positions is getting weaker and weaker, and its elasticity is declining either. However, this dissertation takes a dialectical attitude to this problem, and I reject the stereotyped thinking pattern of one-size-fits-all. On the one hand, our country has an admirable economic growth rate accompanying with comparatively large increasing of employment rate after the reform and open policy. Each country has to confess that the employment elasticity will be getting less and less in the process of economic development with its economy making progress and growing mature. So the dogmatic conclusion of "high growth with low employment" is too biased. We should acknowledge that China's economy growth plays an important role in providing job positions. On the other hand, in the process of our economy growing, I also have to concede the employment elasticity appears strong fluctuant in some economic period.In order to explain the dissimilated mechanism of employment problem of China, this dissertation keeps a foothold of the transforming characters from planned economy to market economy unlike other countries. During the economic system reforming and industrialization process of China, the particular factors such as the dual economic structure, the transformation of the economic growth mode, the adjusting of economic structure, and the relative surplus of economy and knowledge unemployment, can explain the dissimilation between the economic growth and the unemployment rate to a large extent. It is necessary to note that there is much interrelation tendency among those transforming factors, which means that they are not brought into play respectively, but as a compatible entirety.With the two dissimilated characteristics of employment problem in China, our country should take some measures to solve and relieve. Some feasible policies are as follows: transforming the mode of economic growth, promoting the unofficial employment, developing human resource rationally though professional education, forming the unemployment warning mechanism and so on. Of course, solving the unemployment problem effectively is a systematic project, and it needs a long time to make progress in the growth of economy constantly.