State-sector shrinkage and workforce reduction in China

Restructuring of the state sector in China in the late 1990s reduced the workforce by an estimated 30 to 40 million. This paper uses firm-level data from a survey of 800 enterprises in China to test various explanations for job loss and firm exit among state-owned enterprises (SOEs). The results, based on OLS and binary logistic regression models, suggest that small firms (by output and tax remissions) in labor-intensive sectors, and those in coastal Jiangsu province, had greater likelihoods of firm exit and of workforce decline during the late 1990s. Surviving SOEs continued to report only small reductions in payroll size in comparison to firms under other forms of ownership.