Abstract
At the end of the 1970s, the Communist Party of China (CPC) acknowledged that planned economy had not managed to increase the Chinese standards of living. Consequently, it started to reform the economic system in order to modernize it. The labor market was also not been excluded from such reforms. They were aimed at transforming the state-distribution system into a market regulated one according to the principles of a market economy. Before the reform concerning the labor market took place in 1978, job distribution was completely determined by the Household Regulation System or hukou system. The hukou system was first introduced by Mao Zedong in 1958. Essentially, it divided the Chinese population into two categories: ''agricultural'' and ''non-agricultural'' (i.e. urbans). However, in the late 1970s, the super-production in agriculture resulted in the opening of Chinese borders to foreign enterprises, and the transition to a market economy triggered a strong need for workforce in urban China. On the contrary, the workforce was too important in the rural areas.
