Study On The Employment Effects Of China's Fiscal Expenditure Policies

Employment is the paramount necessity of people's livelihood. At present, China is facing with both contradiction in the total supply and demand and structural problems, indicating an abnormally severe employment situation. As shown in the historical practices of developed countries with market-oriented economy system, it is impossible to simply rely on the strength of market mechanism to solve the employment problem. The implementation of the Employment Promotion Law of the People's Republic of China as of January2008has marked the determination of Chinese government's role in the expansion of employment from a legislation perspective. In2013, the Third Plenary Session of the18th Central Committee of the Chinese Communist Party explicitly put forward in its Resolutions CPC Central Committee Concerning Some Majors Issues on the Round Deepening of Reformthat, a linkage mechanism of economic development and employment promotion shall be established to complete the liability system for the government to promote employment. It pointed out the direction for the future employment work. Fiscal expenditure policy is one of the most important approaches for the implementation of macroeconomic regulation and control by the government. How to give full play to its positive role in the promotion of employment is worth studying. In the paper, the major contents are as followed:First of all, based on a brief presentation of research literatures on the relationship between fiscal expenditure policies and employment at home and abroad, it analyzes the relevant theories on fiscal expenditure policies and employment. On basis of an overall consideration of theoretical basis, expenditure scale and data availability, the paper selects fiscal investment, and fiscal expenditures on education, science, social security and administration as the representatives of the structural variables of fiscal expenditure policy, and analyzes their function mechanism to employment, and puts forward the analysis methods.Secondly, it conducts an empirical analysis on the employment effects of China's fiscal expenditure policies. Through an analysis on the development history of China's fiscal expenditure policies, it points out that China's fiscal expenditure policies for promotion employment have experienced a process from passive adaptation to active engagement. With respect to the empirical analysis, the paper utilizes co-integration analysis, dynamic response analysis and Granger causality analysis to conduct an empirical test to the effects of gross fiscal expenditures on the aggregate employment and the quantity of employment of tertiary industry and to the effects of fiscal expenditure structure on the aggregate employment. The results show that:(1) gross fiscal expenditures have an unobvious effect on aggregate employment in a long term, but a positive effect in a short term; GDP has great positive effect on the long-term aggregate employment; wage level is not the cause for the variation of aggregate employment, but the variation of aggregate employment can induce the variation of wage level.(2) In the long term, gross fiscal expenditures can obviously restrain the employment of the primary industry, but promote that of the secondary industry, and weakly restrain that of tertiary industry.(3) Among the major items of fiscal expenditure structure, only fiscal expenditure on education can have a great positive effect on the long-term aggregate employment, while fiscal expenditures on investment, science, and administration as well as social security all have negative effect on the long-term aggregate employment. According to the employment promotion effect degrees, the major items of fiscal expenditures can be ranked as:fiscal expenditure on education, fiscal expenditure on social security, fiscal expenditure on investment, fiscal expenditure on science, and fiscal expenditure on administration.Subsequently, the paper conducts an overall judgment of China's employment situation from the perspectives of the relationship between employment growth and economic growth, and the relationship between variation of employment structure and labor market supply and demand, etc., and analyzes the reasons for the unobvious employment effect of fiscal expenditure polices from perspectives of fiscal policy objectives, fiscal investment fields, fiscal expenditure on education, fiscal expenditure on science, fiscal expenditure on administration and fiscal expenditure on social security, etc.Lastly, on basis of the reason analysis, the paper imitates the experience of major countries on utilizing fiscal expenditure policy to promote employment, and puts forward the linkage mechanism between economic growth and employment promotion, and the route selection for fiscal expenditure policies promoting employment which emphasize on economic structure adjustment, fiscal expenditure structure adjustment and optimization respectively.