Who is Covered by Unemployment Insurance in China? De jure coverage, de facto coverage and the dynamics of development

Abstract

The long period of fast economic growth in China has created entrenched patterns of dualization in the labour market, and in social security. Chinese law calls for all employment to be formalized and covered by a relatively generous system of five social insurances, including one for unemployment. However, despite stagnation in standard formal employment, the number of persons covered by unemployment insurance continued to increase in the 2010s, and the aim of this study is to explain this puzzle. The case of unemployment insurance is particularly instructive regarding dualization in the labour market, given that only employees at working age participate in the scheme. We rely on data at prefectural-city level from the National Bureau of Statistics, satellite data for night lights and urban land use, event data for labour unrest, and a corpus of regulatory documents labelled via machine learning. The analysis focuses on descriptive statistics and long-differenced regression. The results indicate that beyond classical standard employment, the expansion of unemployment insurance is driven by economic growth and cities’ competition for a shrinking pool of migrant labour.