Faithin Omaha eBook Collection

Download or read book Have Chinese firms become smaller? If so, why? written by Yang, Qiming and published by Intl Food Policy Res Inst. This book was released on 2016-09-23 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Normally as an economy develops, firm sizes increase. However, as measured by the employment rate, the firm size in China declined from 2004 to 2008. In this paper, we develop a structural dynamic model with heterogeneous workers to study the relative contributions of three factors to declining firm size: rising real wages, implementation of minimum wages, and the introduction of a new national labor contract law. While rising wages make a sizeable contribution, we find that the new labor law plays a dominant role in solving the puzzle. In comparison, the impact of minimum wages is more muted.