Abstract

There has been a general consensus that unemployment is a result of an economy that fails to generate substantial growth. Economic growth itself is based on efficient production, international competitiveness and an efficient labour market system. It is also generally agreed among economists that governments share responsibilities in terms of promoting growth and stabilising the economy. However, there are significant differences in the roles played by governments, and the degree to which they are active participants in market for labour. This thesis considers Poland's approach to a market economy as a case representing a "passive" model. Sweden, on the other hand, represents an "active" model. Through a cost-benefit analysis, this thesis finds that both Polish and Swedish models provide valuable lessons for China's ongoing labour market reform. However, it is inconclusive to claim which model is superior to the other. Instead, the thesis argues that the effectiveness of labour market policies depends on unique factors in each country. In China these factors include the size of the labour force, the presence of a stagnant state-controlled industrial sector, and a past history of treating employment as both an economic and welfare issue.