Study On The Employment Effect Of China’s Undertaking International Service Outsourcing

Since the1990s, with the propelling of the information technology, more and more enterprises began to adopt outsourcing strategies in order to better focus on their core advantages and lower operating costs, service outsourcing is flourishing worldwide. As a new form of industrial economy, the rise of international service outsourcing puts forward many new research topics, among which, the employment effect is worth studying. Under the push of government, nowadays China has become the world’s second largest services undertaking country, well then,does international services outsourcing have an important impact on China’s labor market? Through what specific ways does it affect the employment? And whether does it optimize the structure of employment?Based on the above questions, this paper begins with the concept of offshoring and determining the scope of the employment effects of this paper, and then reviews related literatures at home and abroad from the perspectives of the services awarding country and the services undertaking country respectively. Then this paper introduces some theoretical background and model about international services affecting the demand for labor. What’s more, the paper analyses the channels of affecting employment from direct and indirect effects including technical overflow effect, capital inflows effect and industrial upgrading effect. After that, this paper conducts the empirical research by the relevant variables of time series data of China from1997to2012. The three industries’ employment, skilled labor employment, as well as employment structure effects are analyzed. And the empirical results show that undertaking international services outsourcing has a negative effect on the first industry’s employment, while promoting employment for both the second industry and the tertiary industry, and the promoting effect is much bigger for highly skilled labor. Additionally, it does improve the relative proportion of high-skilled labor to low-skilled labor and the share of tertiary industry’s employment. Finally, this paper puts forward recommended measures on promoting the development of international service outsourcing to expand employment amount and optimize employment structure for our country.