Are profits shared with workers in China’s factories?

By Wenjing Duan and Prof. Pedro S. Martins

China’s recent emergence in the world economy was underpinned by a massive process of labour reallocation delivered by the country’s nascent labour market. After several decades in which labour was allocated and rewarded centrally, according to communist principles, a number of market-oriented reforms led to greater flexibility and responsiveness to demand and supply. Given the large pool of underemployed workers eager to increase their incomes, in particular in rural areas – over 150 million people according to some estimates –, the potential for growth from industrialisation and exports was considerable.

China Duan Martins

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Brown Bag Seminar | Children, Earnings and Careers in an Internal Labour Market

On Wednesday 14th of March, Prof. Claudio Lucifora (Catholic University of the Sacred Heart Milan) will be presenting his research.

Abstract

Using a unique 12-years panel of personnel records from a large French company, we find that becoming mother (extensive fertility margins) largely affects labour market outcomes. Instead, fatherhood does not significantly impact on men’s wages or careers. An event study approach with the use of non-parents as control group enables us to show that, prior to childbirth, future mothers’ earnings are in line with that of non-mothers. However, one year after birth, they start to fall, reaching -9% in total pay and -30% in individual bonuses. This drop is persistent: 8 years after childbirth there is no evidence of a catching-up trend. Mothers also have lower chances to climb-up the hierarchy of the firm and be promoted to managerial positions. A decomposition of the motherhood penalty shows that these “missed promotions”, likely due to an increase in absenteeism during the child’s pre-school age, are the main determinants of mothers’ lower outcomes within the firm.

Lucifota, C., Meurs, D. and Villar, E. (Jan, 2018)

Brown Bag Seminar | Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad

On Wednesday 7th of March, Professor Pedro Martins (SBM) will be presenting his research.

Abstract

The increased range and quality of China’s exports is a major ongoing development in the international economy with potentially far-reaching effects, including in labour markets. On top of the direct effects of increased imports from China studied in previous research, in this paper we also examine the indirect labour market effects stemming from increased export competition in third markets. Our evidence, based on matched employer-employee panel data from Portugal covering 1991-2008 period, indicates that workers’ earnings and employment are significantly negatively affected by China’s imports, but essentially only through the indirect, ‘market-stealing’ channel. The results are robust to a number of checks, including an alternative measure of the indirect effects, and are found to be stronger for women, older and less educated workers, and workers in domestic firms.

Cabral, S., Martins, P., dos Santos, J. and Tavares, M. (Feb, 2018)