Paper Info
Title
The Political Economy of Labor Employment Decisions: Evidence from China.
Abstract
In China's transitional economy, one of the major objectives of the government is to maintain social stability. We hypothesize that, through state ownership and appointment of executives, Chinese government officials can influence firms' labor employment decisions by limiting layoffs when firms' sales decline. Consistent with this hypothesis, we find that state-owned enterprises (SOEs) have stickier labor costs than non-SOEs, and the presence of politically connected managers makes labor costs even stickier in SOEs while having little effect in non-SOEs. Such effects are stronger in regions with weak market institutions and during time periods when government officials are to be promoted. We also show that the government reciprocates SOEs' sticky labor policies with subsequent subsidies.
Year
DOI
Venue
2020
10.1287/mnsc.2019.3345
MANAGEMENT SCIENCE
Keywords
DocType
Volume
SOEs,political connection,labor costs,cost stickiness
Journal
66
Issue
ISSN
Citations 
10
0025-1909
0
PageRank 
References 
Authors
0.34
0
3
Name
Order
Citations
PageRank
Zhaoyang Gu100.34
song tang222.73
Donghui Wu300.34