On The Employment Effects Of Multinational Companies

This article starts with the modificatory production function, establishes a new frame for theory analysis, based which this article then analyses the action mechanism of extrusion effects MNCs gives to China, and discusses the three different phases of MNCs'employment effects, namely absorb effects in short term, extrusion effects in medium term and draught affects in long term. Bases on the analysis, the article makes a new explanation of China's employment elasticity since China's reform and opening. At last, the article takes Shanghai's foreign capital and employment conditions in the secondary industry as a sample, makes an empirical analysis with econometric instruments.In my opinion, there still exists a long distance in the economy development level and production efficiency between China and foreign developed countries, so the large-scale and continuous inflow of foreign capital causes a double impacts to China's technology and capital, induces MNCs'extrusion effects. In 1990s, the employment elasticity of China descended apparently, which was correlative closely with the extrusion effects. In the special current situation, using foreign capital an economic policy to promote GDP increase, it's unrealistic to hope it pull employment's going up. So it is important to work out macro-economic social policy and separated employment policy oriented by promoting employment, then the employment problem of China may be settled.