The Impact Of Urban Expansion On The Development Of Low-skilled Service Industry And The Creation Of Non-agricultural Employment

The coordinated development of urban and rural areas is China’s major policy.In order to narrow the income gap between urban and rural areas,and to achieve scale operations and make farmers an attractive occupation,it is ultimately necessary to rely on the reduction of the number of farmers.Otherwise,according to Engel’s law:the proportion of food purchases decreases with economic(income)growth,and so do the society payment to agriculture accordingly,which inevitably reduces the relative income of farmers.Based on the slowdown of urbanization in China,there is still a large population living in rural areas in the future.During the 19th National Congress,the central government proposed a rural revitalization strategy,which also requires urbanization to be promoted quickly and well.Chinese past urbanization roads have characterized young laborers with relatively high levels of human capital,and the rural surplus populations are mainly low-skilled labors.Thus,attracting rural populations,including middle-aged labors,into cities and giving them the opportunity to stay in cities for longer is the key to raising the level of urbanization.Since the urbanization ultimately depends on the non-agricultural industry to determine the demand for labors,the development of urban service industry,especially the expansion of low-skilled service industry,is the main source of power for current and future growth of low-skilled labor demand.In addition,urbanization itself will promote the development of the service industry and create demand for low-skilled labors.Compared with the scattered rural areas:On the one hand,cities and towns have higher population density,their products and services markets are huge,and their division of labor is also sufficiently detailed,thus increasing the service industry segments and service practitioners.On the other hand,urbanization will increase the income level and time opportunity cost of residents,thus stimulating the growth of service consumption demand.In this way,urban expansion is conducive to the expansion of low-skilled services to absorb more non-agricultural employment.However,on the issue of urban development,the focus of government policy is to promote the construction of small and medium-sized cities and towns,and take measures to control the expansion of some large cities.This practice of restricting the development of large cities and arranging economic resources in geographically disadvantaged areas through administrative power is not conducive to inclusive employment and to economic growth and social harmony.What needs to be paid attention to on this issue is:the transfer potential of migrant workers in the future,especially how a large number of rural low-skilled labors can be transferred to non-agricultural employment in cities.In the context of the need for sustained transfer of rural labor,can cities provide sufficient non-agricultural employment opportunities for these labors?Is the expansion of urban low-skilled service industry the main source of non-agricultural employment?If the low-skilled service industry can absorb more low-skilled labor,then what kind of urbanization or what kind of city is more conducive to the expansion of low-skilled service industry to create more non-agricultural employment opportunities,big cities or small and medium-sized cities?Focusing on these issues,this paper will conduct theoretical analysis and empirical investigation on the factors affecting the demand and employment of urban low-skilled service industry,and empirically measure the relationship between the increase in demand for low-skilled service industry and the increase in its employment.The main contents and related conclusions of this paper are as follows:Research content 1:Theoretical analysis and empirical test of the influencing factors of urban family life service outsourcing demand,determine the impact of city size on the households’ purchase of housekeeping services instead of housework.The research goal of this part is to determine the relationship between city size and family life service outsourcing behavior,and to predict the impact and trend of future urban population structure on labor service consumption demand.This part of the study explores the factors affecting the demand for outsourcing of family life services,and mainly measures the role of city size in households’ purchase of housekeeping services.Through household-level data demonstration,the results show that from the perspective of family life service outsourcing,city total population,population density and land area have significant positive impact on whether urban households purchase housekeeping service and housekeeping service time,indicating the three major measurements of urbanization-city total population,population density and land area-are important factors influencing the demand for urban labor service consumption.Research content 2:Theoretical analysis and empirical test of the influencing factors of urban low-skilled service industry consumption demand,determine the impact of city size on the total demand and per capita demand of low-skilled service industry.The research objectives of this section are to determine the relationship between urban size and consumer demand for low-skilled services,and to predict the impact and trends of future city size expansion on demand for low-skilled services.This part of the study explores the influencing factors of urban low-skilled service industry demand,and mainly measures the role of city size in low-skilled service industry GDP.Through the step-by-step regression of the urban demand for low-skilled service industry and the per capita demand model,it is found that the city size plays an important role in expanding the consumption demand of low-skilled service industry,and empirically finds that the urban population density variable is the most stable and effective index.Then the model estimation of the squared terms added,and the empirical results also show that the linear and nonlinear model estimations are similar.Research content 3:Theoretical analysis and empirical test of the influencing factors of urban real employment in low-skilled service industry,determine the impact of city size on the total employment and employment ratio of low-skilled service industry.The research objectives of this section are to determine the relationship between city size and actual employment in low-skilled services,and to predict the impact and trends of future city size expansion on employment in low-skilled services.This part of the study explores the influencing factors of urban low-skilled service employment,and mainly measures the role of city size in the actual employment of low-skilled services.Through the step-by-step regression of the urban low-skilled service industry employment and employment ratio model,it is found that the city size plays an important role in the creation of low-skilled service industry employment opportunities,and empirically found that the urban population density variable is still the most stable and effective index.Subsequently,the model estimation of the squared term is added,which confirms that the influence of city size on the employment of low-skilled service industry has a nonlinear mechanism.The empirical results also explain that the inflection point is basically outside the distribution interval,which is the main reason that leads to the agreement between the linear and nonlinear models.Research content 4:Theoretical analysis and empirical measurement of the quantitative relationship between urban low-skilled service industry demand and employment,and determine the non-linear impact of urban low-skilled service industry demand on employment growth.The research goal of this part is to measure the relationship between consumer demand and actual employment in low-skilled service industry,and to predict the difference in urban low-skilled service industry expansion between demand increase and employment increase.This part of the study analyzes the expansion of urban low-skilled service industry consumer demand is the most important way to create employment opportunities in related industries,but the low-skilled service provider-scale economies that accompany the expansion of urban size will make the demand elasticity of low-skilled service industry employment less than 1.Through the regression of the employment elasticity and employment ratio model of urban low-skilled service industry,it is found that the employment of urban low-skilled service industry increases with the increase of demand,and the demand elasticity of employment is significantly less than 1,which confirms the increase of urban residents’ demand for labor services does not necessarily create the actual employment opportunities for the same proportion of low-skilled labors in the service sector.Research content 5:Theoretically analyze the impact of urban scale on demand and employment of low-skilled service industries,and measure the effects of total urban population,population density and land area on demand and employment of low-skilled service industries.The research goal of this part is to measure the relationship between city size indicators and low-skilled service employment,and compare the consistency and robustness of each indicator in cross-sectional data and panel data empiricals.This part of the study re-estimates the city total population,population density and employment indicators of low-skilled service industry,based on data of Population Census of China by County and China City Statistical Yearbook,and continues to use panel data for empirical analysis.Through panel regression,annual regression and threshold regression,it is found that the city size has a positive impact on the employment of low-skilled service industry in each time section,and the positive impact of urban population density variable is still the most stable and reliable in each empirical process.Even considering the existence of a non-linear mechanism of action,the inflection point or threshold value of the positive effect of city size is basically outside the current city size distribution interval in China,and the continued expansion of city size will still be conducive to promoting employment in low-skilled service industries.The study confirmed the consistency of the impact of city size on employment in low-skilled services in panel data and cross-sectional data estimates,and tested the results of the above empirical results to be robust and reliable.Based on the five aspects of this study,following conclusions are drawn:With the expansion of the city size,the demand for urban family life service outsourcing increases.This micro level increases the demand for labor services,can aggregated to be total low-skilled service at the city level.The increase in demand for low-skilled services will be further transformed into the increase in demand for low-skilled service labors,which will create non-agricultural employment opportunities for low-skilled labors.However,due to the expansion of city size,the supply of services will be in the economies of scale,which will make service employment decrease with the improvement of service efficiency,which ultimately leads to the increase of low-skills service employment is less than the increase of low-skills service demand,so there is a non-linear mechanism between the city size and low-skilled service employment.Since the inflection point of nonlinear action is basically outside the city size distribution interval,the positive effect of city size on employment in low-skilled service industry will not change at this stage.From the empirical results of household-level data,city cross-section data,and city panel data,city size expansion is conducive to the increase in demand and employment in low-skilled service industries,and population density compared with city total population or land area variables,is always the most robust and effective factor.In addition,factors such as city population structure,average wages of employees,city industrial structure and material capital investment related to city economic development will also have an impact on demand and employment in low-skilled services.In summary,from the perspective of developing low-skilled service industries to absorb more rural low-skilled laborers for non-agricultural employment,large cities with highly concentrated populations are more efficient than small cities(towns)with scattered populations:such as building a large-sized city with 2 million people and higher population density is obviously better than building two medium-sized cities with 1 million people and lower population density;building a medium-sized city with 1 million people is also better than building two small-sized cities with 0.5 million people,and so on.The conclusion supports policies that increase demand and employment in low-skilled services through urban population aggregation and city size expansion.This study theoretically agrees to transfer more rural low-skilled labors from the perspective of developing urban low-skilled service industry.There are also three related policy recommendations:First,moderately relax the population movement restrictions between urban and rural areas;Second,moderately encourage the centralized resettlement of urban and rural residents;Third,moderately inclusive urban low-skilled service employment.