Does the Labour Service Cooperation Policy Promote Re-employment: Evidence from China

Abstract

While debates about the effectiveness of labour service cooperation policies are raging in Western countries, more information about this topic is needed in the Chinese context. Using the difference-in-differences identification framework and provincial panel data to estimate the employment-promoting effects of the labour service cooperation policy implemented in pilot provinces in China, this study found that the labour service cooperation policy helped to reduce the number of unemployed people and that public–private cooperation created a new approach by combining all stakeholders, such as job seekers, employers, and public employment service agencies. The labour service cooperation policy had a lag policy effect on employment promotion, which was persistent and constantly amplified. The policy was more effective when implemented in regions where the manufacturing industry is the primary sector and the unemployment burden is high.