China's Urban Unemployment: Exposed 'Disguised Unemployment' or Insufficient Aggregate Demand?

China ' s Urban Unemployement : Exposed " Disguised Unemployment " or Insufficient Aggregate Demand ?

China's enterprise reform has resulted in large-scale layoff of workers from state and collective owned enterprises. Mainstream Chinese economists argue that many of the workers in these enterprises are " disguisedly unemployed " and have to be laid off to achieve better economic performance. In this paper, I argue that the productivity of state and collective owned enterprises to a large exten...

Aggregate Demand, Productivity, and ‘‘Disguised Unemployment’’ in the Chinese Industrial Sector

— Many economists argue that the Chinese state and collectively owned enterprises are fundamentally inefficient and better economic performance requires large-scale layoff of the state and the collective sector workers. This paper argues that the productivity of state and collectively owned enterprises depends on the level of aggregated demand. If the government undertakes expansionary policies...

A Model of Aggregate Demand and Unemployment

We present a static model of aggregate demand and unemployment. The economy has a nonproduced good, a produced good, and labor. Product and labor markets have matching frictions. A general equilibrium is a set of prices, market tightnesses, and quantities such that buyers and sellers optimize given prices and tightnesses, and actual tightnesses equal posted tightnesses. In each frictional marke...

Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?

What Explains High Unemployment? The Deleveraging – Aggregate Demand Hypothesis

A negative aggregate demand shock driven by household deleveraging is responsible for a large fraction of the decline in U.S. employment from 2007 to 2009. The deleveraging – aggregate demand hypothesis predicts that employment losses in the non-tradable sector will be higher in high leverage U.S. counties that experienced the bulk of the deleveraging process, while losses in the tradable secto...