Comment on “The Labor Contract Law, Macro Conditions, Self‐Selection, and Labor Market Outcomes for Migrants in China”

• DOI: http://doi.org/10.1111/aepr.12158
• Author: Albert Park
• Published date: 01 January 2017
• Date: 01 January 2017

Comment on “The Labor Contract Law, Macro

Conditions, Self-Selection, and Labor Market

Outcomes for Migrants in China”

Albert PARK†

Hong Kong Universityof Science and Technology

JEL codes: J30, J41

Meng (2017) analyzes survey data from China to assess the impact of China’s2008Labor

Contract Law on the employment outcomes of migrant workers in China. Her results

suggest that the Law had mixed impacts, likely negatively affecting wages and working

hours, but positively affecting social insurance participation. Meng finds that many

outcomes targeted by the Law are strongly influenced by macro labor conditions as

measured by city wages and unemployment rates, rightly pointing out that studies must

take macro-factors into account to correctly assess the impact of labor regulations. She also

points outthat changes over time in the impactof labor contracts onemployment outcomes

could result from changes in selectivity of what types of people have jobs with labor

contracts rather than the impacts of the Law itself, and presents evidence that such bias

leads to an overestimation of the impacts of the Law.

Meng is up front about the difficulty of cleanly identifying the impact of the Law

because it was implemented nationally at one point in time. As a result, any before-after

comparisons could merely reflect changing labor market conditions in China. There are

also limitationsimposed by the availabledata. The Rural-Urban Migrationin China Project

(RUMICI) migrant panel data in 15 cities only began in 2008, after the law was

implemented. Thus, before-after comparisons must rely either on repeated cross-sectional

data using RUMICI pretest data on migrants from 4 cities in 2007 or the population

mini-census data in 2005, which used a different sampling approach. Another major

limitation is that the RUMICI survey did not ask questions about whether workers had

signed labor contracts until 2010. As a result, Meng uses formal employment (permanent

or fixed term employment, rather than temporary employment) as a proxy for having a

labor contract for the years before 2010. This is a very crude and probably unsatisfactory

approach given that it conflates contract status with other job attributes. Other research

has found that the share of “formal”workers with labor contracts increased after the Law

was implemented (Gallagher et al., 2014).

The difference-in-difference specification comparingimpacts on formal employees and

temporary employees while controllingfor macro labor conditions producesquite different

†Correspondence: Albert Park, Institute for Emerging Market Studies, Hong Kong University of

Science and Technology, Clear Water Bay, Kowloon, Hong Kong. Email: albertpark@ust.hk

doi: 10.1111/aepr.12158 Asian EconomicPolicy Review (2017) 12, 66–67

66 ©2017 JapanCenter for EconomicResearch

bs_bs_banner