Impact of the Global Financial Crisis on Off-farm Employment and Earnings in Rural China

This paper examines the effect of financial crisis on off-farm employment of China’s rural labor. Using a unique data set collected across China, we find that there was a large impact. By April 2009 the net impact on off-farm employment reached 6.8 percent of rural labor force. Monthly earnings also declined. However, while we estimate that 49 million were laid-off between October 2008 and April 2009, half of them were re-hired in off-farm by April 2009. By August 2009, less than 2 percent of rural labor force was unemployed due to the crisis. The robust recovery helped avoid the instability.