Summary:
Full employment is the foundation of economic and social stability and is also the primary target of China's macroeconomic policy.China has implemented an employment priority strategy and issued a series of policies to promote employment. We discuss how local governments achieved their employment targets and the quality of urban employment. We manually collect unemployment data published in 2,870 government work reports from 287 cities in China's 31 provincial administrative regions from 2007 to 2016. We discuss the impact of local governments' unemployment target adjustments on employment quality. This target is measured by the planned unemployment rate in the 2,870 government work reports, and employment quality is measured by the number of redundant. We find that less stringent unemployment targets reduce the number of employees being made redundant and improve employment quality. The impact of the unemployment target adjustment is asymmetrical. Firms will be more sensitive to an upward adjustment, as this will significantly reduce the number of redundant employees, but we find that a downward adjustment is not significant, indicating that the adjustment has more of an effect when the initiative is government-oriented. We also find that the impact of an unemployment target adjustment is stronger in private companies, companies with fewer subsidies, and regions with a high degree of marketization. Finally, we find that a less stringent unemployment target will also increase firms' total factor productivity and value. Our study makes several contributions to the literature. First, we directly assess the impact of the government's unemployment target management on the quality of employment, thus extending the literature concerning the impact of government behavior on employment. Most studies focus on government behaviors that promote employment, such as credit supply, subsidies, and tax incentives. However, these measures are more of a stimulus strategy in response to unemployment; that is, they passively prevent unemployment from increasing. We expand on this by focusing on government unemployment target adjustment. Second, we contribute to the literature on government target management by examining how local governments manage unemployment targets.This research focuses on the adjustment of unemployment targets rather than traditional management through monetary policy targets and the consequences of local economic growth targets. Third, the government's influence on the resource allocation of firms has recently become the focus of academic attention. The conclusions mainly reflect the situation for firms that are strongly influenced by government resource allocation. In terms of government orientation, we find that firms will actively adjust the levels of redundant employees after the government's unemployment target is adjusted, and this mainly occurs for firms with strong motivations for active adjustment. We offer the policy suggestion that local governments should consider the quality of employment in their management of unemployment targets, in addition to considering the employment rate, and also should guide firms to create new and more suitable jobs to achieve the “higher quality and fuller employment” target proposed in the 19th National Congress of the Communist Party of China.
曹春方, 邓松林. 政府失业目标调整与就业质量——来自微观企业层面的证据[J]. 金融研究, 2022, 504(6): 115-132.
CAO Chunfang, DENG Songlin. Government Unemployment Target Adjustment and Employment Quality: Evidence from Micro-Firms. Journal of Financial Research, 2022, 504(6): 115-132.
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