Dynamic labor demand in China: public and private objectives
研究中国制造业中私有和公有企业的动态劳动力需求，发现公有企业面临更高的二次调整成本，可能反映了其内化就业调整的社会成本。
This article studies dynamic labor demand by private and public manufacturing plants in China. The analysis uncovers the objectives of public and private enterprises and estimates labor adjustment costs by ownership. Public plants maximize the discounted present value of profits without a soft budget constraint. There is strong evidence of quadratic and linear firing costs at the plant level. The higher quadratic adjustment costs of the public plants may reflect their internalization of social costs of employment adjustment. Domestic private plants and collective plants have about the same discount factor, much lower than state‐controlled plants.