Unemployment, Underemployment, and Employment Policy in China's Cities

Compared with other large and populous developing nations, China shows little sign of large-scale urban unemployment. There are two main reasons for this a long-standing policy of actively discouraging rural-urban migration and the allocation of new urban labor force entrants to permanent positions in state or collective enterprises. The former policy limits the supply of urban workers below what it would be in the absence of restrictions on labor mobility, and the practice of job assignment limits the incidence of unemployment among designated urban residents. Furthermore, the small numbers of unemployed workers in Chinese cities consist largely of recent graduates, many of whom willingly pursue extended job searches in the hope of finding attractive positions. Even though urban unemployment is a small fraction of the labor force and is partly voluntary in nature, it would be a mistake to conclude that unemployment and policies intended to prevent unemployment can be excluded from consideration as factors that crucially affect the outcome of China's reform efforts. China's very success in avoiding urban unemployment is partly responsible for important