Breaking the 'Iron Rice Bowl' and Precautionary Swings: Evidence from Chinese State-Owned Enterprises Reform
| Autor: | Feng Huang, Dongming Zhu, Zheng Liu, Hui He |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
Estimation
Labour economics Government Natural experiment jel:C20 media_common.quotation_subject jel:E21 Precautionary saving uncertainty structural change self-selection bias permanent income hypothesis difference-in-difference methods Job security Identification (information) Precautionary savings Unemployment jel:P31 Business China media_common |
| Zdroj: | Federal Reserve Bank of San Francisco, Working Paper Series. :01-42 |
| DOI: | 10.24148/wp2014-04 |
| Popis: | We use China’s large-scale reform of state-owned enterprises (SOE) in the late 1990s as a natural experiment to identify and quantify the importance of precautionary savings for wealth accumulation. Before the reform, SOE workers enjoyed the same job security as government employees. After the reform, a cumulative of over 35 million SOE workers have been laid off, although government employees kept their “iron rice bowl.” The change in unemployment risks for SOE workers relative to that of government employees before and after the reform provides a clean identification of income uncertainty that helps us estimate the importance of precautionary savings. In our estimation, we correct a self-selection bias in occupational choices and we disentangle the effects of uncertainty from pessimistic outlook. We obtain evidence that precautionary savings contribute to about one-third of the wealth accumulations for SOE workers between 1995 and 2002. Precautionary savings motive is thus an important factor that drives the observed rising Chinese saving rate. |
| Databáze: | OpenAIRE |
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