How China's Rural Work Force Adjusted to the Financial Crisis

Nearly 10 percent of China’s more than 500 million rural labor force lost their jobs at the beginning of the global financial crisis, but the workers adjusted surprisingly well in its aftermath, according to a new working paper by Jikun Huang, Huayong Zhi, Zhurong Huang, Scott Rozelle, and John Giles. 

In fact, the signs of job market recovery started as early as April 2009, faster than the recovery in more developed economies in North America and Europe. Nationally representative data collected in 2009 show that among the 49 million workers laid off between October 2008 and April 2009, almost half were rehired in off-farm work by April 2009. By August 2009, less than 2 percent of the rural labor force remained unemployed because of the crisis. How did this happen? First, as migrant workers went home, the agricultural sector and their families in home villages absorbed the shock to employment. 

It helped that China, through land tenure arrangements, put cultivated land into the hands of poor households. Second, the Chinese government responded to the crisis with a bold stimulus plan that created jobs in industries such as construction and services -- sectors that often employ rural migrant workers. In addition, educational attainment played a role, as the young and less educated are more likely to suffer from long-term unemployment. The robust recovery appears to have helped avoid instability and allowed China's workers to avoid prolonged suffering as a result of the collapse of the export market in late 2008.