Labor Market Frictional Unemployment Research In China

Research on the reason for unemployment and how to solve this problem has always been an important topic in the field of labor market and Macro-economics. At present, the Equilibrium Unemployment Theory has become the main theory of frictional unemployment in labor market to reveal the impact of economic policies on unemployment. The main purpose of this paper is, through elaborate analysis of the equilibrium unemployment theory, to understand the reason and mechanism of frictional unemployment, to analyses the equilibrium relationships of economic parameters in the matching model.In our empirical study, this paper comes up with an extended nonlinearity matching model, using panel data including 30 provinces in China of 1996-2011 under 2SLS regressions, to test the matching efficiency of “workers–job vacancies”. After controlling the possible endophytism and other factors, we find that: The efficiency of them is 0.7, which is low and has a decreasing trend. In addition, this paper develops a system equation model to analyze the equilibrium relationship of match efficiency, wage determination, job creation and destruction empirically. As a whole, the empirical result coincides with the theoretical statement. From the perspective of reducing searching cost and enhancing the probability of successful match, the paper proposes some advice for solving the matter of frictional unemployment at end.