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The puzzle of strong union effects in China

Liu, Mingwei and Li, Chunyun (2014) The puzzle of strong union effects in China. In: China Economy Seminar, 2014-04-23. (Submitted)

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Abstract

Interest in the economic effects of Chinese trade unions has been growing recently. However, to date the limited number of studies in the literature only provide mixed results and suffer from some major conceptual and empirical limitations. In particular, the wage effect of Chinese unions is found significant in some studies, but insignificant in others. Yet, the available studies suggest significant and positive relationships between unionization and some types of mandatory social insurances (though the types of social insurances vary across the studies). Certainly, these findings shall be taken with caution due to the significant limitations of the data and analyses. But if the significant union effects are credible, we will have to face a puzzle: how does a non-representative union in an authoritarian country improve workers' welfare? This paper attempts to resolve this puzzle and give a better answer to the crucial and difficult question -- what do unions do in China? Firstly, based on existing qualitative studies and the authors' multiple years of field research on grassroots union organizing and bargaining in China, this paper proposes a new theoretical explanation on the role of Chinese enterprise level trade unions and develop a set of hypotheses on union effects on wages, mandatory social insurances and other legal labor rights, and non-mandatory fringe benefits. More specifically, we extend the traditional "transmission belt" role of Chinese trade unions in the command economy to the new market environment and propose a "triple intermediary" (an intermediary between the Party-State and workers, between management and workers, and between the Party-state and management) framework to study the effects of Chinese enterprise unions on workers. The hypotheses derived from this "triple intermediary" role of enterprise level unions are: H1: Chinese trade unions do not have a monopoly wage effect. H2: Chinese trade unions are associated with better compliances with mandatory social insurances and other legal labor rights. H3: The union effects on mandatory social insurances and other legal labor rights are contingent, varying for different types of social insurances/legal labor rights and different types of workers, and across different types of enterprises and regions. H4: Chinese trade unions are associated with more non-mandatory fringe benefits. H5: The union effects on non-mandatory fringe benefits are contingent, varying for (different types of fringe benefits) and different types of workers, and across different types of enterprises. H6: Unions with a stronger intermediary role between management and workers are associated with better compliance with mandatory social insurances and other legal labor rights, as well as more non-mandatory fringe benefits. (H7: Unions with a stronger intermediary role between the Party-State and management are associated with better compliance with mandatory social insurances and other legal labor rights, as well as more non-mandatory fringe benefits). Secondly, this paper tests these hypotheses (hypotheses in () are not tested by this study) by carefully analyzing two large datasets: one at the enterprise level and the other at the individual level. These analyses, by addressing some of the major limitations of the existing quantitative studies, provide more rigorous empirical results on the effects of Chinese enterprise trade unions on workers. Finally, our hypotheses are supported by the analytical results. We draw implications for the reform of Chinese trade unions and suggest the directions of future research.

Item Type: Conference or Workshop Item (Paper)
Official URL: http://isites.harvard.edu/icb/icb.do?keyword=k1013...
Additional Information: © 2014 The Authors.
Divisions: Management
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HS Societies secret benevolent etc
Sets: Departments > Management
Date Deposited: 13 Oct 2015 10:23
Last Modified: 20 Feb 2019 00:44
URI: http://eprints.lse.ac.uk/id/eprint/63969

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