Construction and testing of the China's labor marketization index

In this paper we used two primary indicators and four secondary indicators to construct China's labor marketization index. We calculated the index at the prefecture-level cities from 2010 to 2016 and tested its correlation with macroeconomic indicators. The results show that there has been much progress in labor marketization in China over the period, and the key to this progress is the quantity factor rather than the price factor. Progress in labor marketization varies considerably across regions and at different levels of cities. The external validity test confirms that this index has a strong scientific basis.