Reemployment of Dislocated Workers in Urban China: The Roles of Information and Incentives

Using original survey data from China, we estimate a discrete duration model to study the reemployment of urban workers who lost jobs during China's major restructuring of the state sector in the late 1990s. Using an exogenous measure of social networks, the number of relatives living in the same city, we provide new empirical support for the importance of social networks in job search. In contrast to studies of other transition economies, our results suggest that access to unemployment subsidies reduces the probability of reemployment within a year substantially (by 34 percent) for men. Unlike men, women's reemployment is not responsive to public subsidies, but is responsive to family circumstances. Women with children of college age are reemployed faster, especially if the local community provides employment referral services, while women with older adult children are less likely to be reemployed.