Unemployment And Labor Market Segmentation In China: Towards An Analysis

China's labor market is experiencing a series of conflict and disorder in the process of its economic transformation. The problems, such as unemployment, widening income gaps and shortages of human capital accumulation, are restricting the further development of China's economy. This thesis discusses the China's unemployment problems under the framework of Labor Market Segmentation (LMS) theories.The reasons for LMS in China are different form the market economies countries. The extent of segmentation in China is also far more significant than that of those countries. For the developed countries, LMS has relation to the characteristics of the commodity markets. But in China, LMS is induced by a series of institutional arrangements, most notably is the residential registration system and the planned labor deployment system. In the process of economic reform, the labor intensive industry and the instability of the commodity market are producing a huge secondary labor market. This led to the difference between the primary and the secondary labor market is more and more distinctness.LMS reduces the mobility of labor between different industries, occupations and regions. However, the industry structure and product structure are constantly changing. In the event that economic structure transformed so rapidly that the labor flow cannot adapt to this change, the economic system will produce a great volume of structural unemployment. In the most probability, China's unemployment problems of the last two decades are caused by the multi-layers of segmentation between the rural-urban divide, sectoral segmentation and dual market segmentation.Repairing the market mechanism, reforming the out-of-date institutional system, freeing the rural-urban migrant channel, and then establishing a unified and flexible labor market, are the major premises and key factors to solve the unemployment problems in China's labor market.