Informal Employment and China’s Economic Development

Abstract

We measure the size of informal employment using both labor market as well as energy consumption approaches. We find that the share of informal employment in total employment was increasingly most of the time between the mid-1990s and mid-2000s, and started steadily decreasing after that until now. This has two contradicting implications for the Chinese economy. On the one hand, it is good news for China’s progress in human development as the process of formalization often brings better income and welfare. On the other hand, for China’s capitalism this could be bad news since the labor costs are likely to continue increasing with a decline in the reserve army of labor.

Keywords:

• Chinese economy
• informal economy
• informal employment

Notes

Based on National Bureau of Statistics Report on Migrant Workers (in Chinese) from 2015 (nongminggong jiance diaocha baogao). The 2015 report is available here http://www.stats.gov.cn/tjsj/zxfb/201604/t20160428_1349713.html, accessed March 1, 2017.

Monthly pay in formal economy is based on China Statistical Yearbook 2016.

Based on National Bureau of Statistics Report on Migrant Workers (in Chinese) from 2009 and 2015 (nongminggong jiance diaocha baogao). The 2015 report is available here http://www.stats.gov.cn/tjsj/zxfb/201604/t20160428_1349713.html, accessed March 1, 2017. The 2009 report is here http://www.stats.gov.cn/ztjc/ztfx/fxbg/201003/t20100319_16135.html, accessed March 1, 2017.

The numbers are based on China Statistical Yearbook 2016.

Based on the National Bureau of Statistics Report on Migrant Workers (in Chinese) from 2012 and 2015 (nongminggong jiance diaocha baogao). The 2015 report is available here http://www.stats.gov.cn/tjsj/zxfb/201604/t20160428_1349713.html, accessed March 1, 2017. The 2012 report is here http://www.stats.gov.cn/tjsj/zxfb/201305/t20130527_12978.html, accessed March 1, 2017.

Ibid.

Ibid.

China Statistical Yearbook 2016.

For example, see the attacks on labor and labor laws from Lou Jiwei, then minister of finance, http://finance.sina.com.cn/hy/20160219/152924312874.shtml, accessed March 1, 2017 (in Chinese).