The Effect Analysis Of Trade Structure On Employment In China

Employment is a big livelihood issue.“Implementation of priority strategy toemployment and more active policies to encourage it,” the18th National Congress ofthe Communist Party of China proclaimed, which shows that CPC and government ofChina pay a high attention to it. In theory, Macroeconomics believes that the increase ofaggregate demand promotes the increase of output under the non–full–employmentcondition. In a closed economic system, aggregate demand relays on domestic demand,however, when it comes to an open economic system, foreign demand also contributesto aggregate demand a lot. In reality, foreign demand relates to trade. China’s has shareda sustainable trade increase, a rising trend of foreign trade dependence degree, and agreat contribution to GDP from entering the WTO in2001. Thus, studying trade andemployment under this condition not only follows the hot topic, but also owns a greatsignificance both in theory and practice.The same as Investment Multiplier Theory, this paper considers that trade canbenefit employment by promoting aggregate demand directly, but also contribute toemployment indirectly by input–output relation between the trade industries and otherindustries associated,which was ignored by the existing studies. To make up for this,this paper abandons the traditional regression model and applies the Input–OutputModel based on the analysis of Chinese trade and employment. The data of the modelincludes real trade value, real output value, and employment during1995–2011. Thispaper measures and calculates the effect of total trade on employment from2002–2011,and the effect of industry sector’ trade on employment from1995–2011, which areanalyzed systematically. For this purpose, this paper is arranged into6chapters: Chapter1is the introduction of this paper, including the background, method, content,advantages and disadvantages; Chapter2is the literature review, including the theory,the empirical studies and the methods. Chapter3and Chapter4are the studies of tradestructure and employment. Chapter5and Chapter6are the studies of effect of trade onemployment, the main part of this paper. Chapter7is the main results and measuressuggested.This paper has some important results as: first, in general, Chinese trade benefitsemployment. The net employment promoted by trade during2002–2011is2.067billion, accounting for27.55%of employment. Second, when it comes to four sectors, manufacture sector is the main contributor to the effect of trade on employment, servicesector is second only to manufacture sector, agriculture is the third, and constructionsector’s trade has little effect on employment. Besides, manufacture sector is the highdirect effect–highest indirect effect sector, service and agriculture sector is the highdirect effect–high indirect effect sector, and construction sector is low direct effect–low indirect effect sector. Third, when it comes to the industry sector classified bydegree of factor intensity, labor–intensity industry is the main part, and belongs to thehigh direct effect–highest indirect effect industry. Capital (technology)–intensityindustry has a transfer from negative effect to positive effect, and a enhancing positiveeffect. Besides, this paper finds that labor–intensity industry and capital (technology)industry shows different adjustment law. The former has a steady growth, and acts as astabilizer of employment, and the later has a delayed adjustment because of thedifficulty of adjustment in output scale.