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Analysis Of The Impact That "Labor Contract Law" Has On Employment

Posted on:2011-08-03Degree:MasterType:Thesis
Country:ChinaCandidate:J F LiFull Text:PDF
GTID:2166360305951513Subject:Labor economics
Abstract/Summary:PDF Full Text Request
The "Labor Contract Law" was enacted in 2007 and was put into force on January 1st,2008. The "Labor Contract Law" made significant adjustments compared to the "labor law" and improved the protection level of labor force greatly. The "Labor Contract Law" seeks to solve the problems such as the low rate of signing labor contract, short-term labor contract, abuse of "probationary period" and labor dispatch. There is heated controversy about the higher level of employment protection. The focus of the controversy is what impacts the higher level of employment protection has on the labor costs and employment. Some scholars believe that the "Labor Contract Law" normalized the signing of labor contracts and is beneficial to the formation of employment relationship. Therefore, the law is less likely to have greater negative impact on employment. Other scholars argue that the rigid provisions of the "Labor Contract Law" would restrict the behavior of the firms and reduce the employment.Many foreign literatures analyzed the impact employment protection (or employment regulation) had on the labor market. In theory, the literatures analyzed the impact employment protection had on employment. The outcome was employment protection reduced employment. In the empirical analysis, some papers tested the correlation between employment protection and employment. Most of the tests were significant statistically. However, it is difficult to ascertain the relationship between the employment protection and employment due to measurement error and the defects of econometric methods.This paper reviews the relevant literatures both home and abroad and analyzes the impact "Labor Contract Law" had on the labor demand of the firms. This paper ascertains the impact the law had on the employment quantity and employment quality. As for employment quantity, this paper analyzes the impact "Labor Contract Law" had on the hiring decision of firms and employment quantity by dynamic optimization model under uncertainty. The conclusion is that the "Labor Contract Law" has limited impact on the employment quantity and will not cause a substantial declination of employment. It is the growth rate of real wage exceeds the labor productivity that reduces employment significantly. As for employment quality, this paper analyzes the game between the firm and workers under the constraint of "Labor Contract Law". The equilibrium shows that the labor contract law can achieve a win-win situation between the firm and workers. In the long run, "Labor Contract Law" will improve the employment quality of workers.
Keywords/Search Tags:Labor contract law, employment protection, employment quantity, employment quality
PDF Full Text Request
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