The Impact Of Labor Skills Structure On The Real Exchange Rate

As the relative price of the two countries'currencies,the exchange rate affects the balance of payments of a country,and it also affects macroeconomic variables such as prices,income,and employment,thus affecting various fields such as economic,financial,and trade between countries.The exchange rate has received more attention in the context of accelerating global integration and the increasingly close economic and trade exchanges between countries.The issue of determining the real exchange rate is one of the key issues in exchange rate research.On the one hand,the early research on the real exchange rate started with the Balassa-Samuelson effect extended from the theory of purchasing power parity,focusing on the effect of productivity on the real exchange rate decision,but due to the increasingly frequent economic and trade exchanges between countries.Problems such as trade barriers and tariff barriers have begun to appear,leading to a gradual increase in transportation costs,and the traditional Balassa-Samuelson effect has been questioned.On the other hand,under the premise of accelerating the global aging process,China has entered a period of economic transformation.With the approach of "Lewis Turning Point",the advantage of cheap labor brought by China's long-term enjoyment of the demographic dividend has gradually disappeared,the sustained and stable development of the economy lacks long-term driving force.The rapid development of the global science and technology industry and the continuous optimization and upgrading of the industrial structure reflect the important role of labor quality as a long-term driving force for economic growth.Therefore,the effect of the labor skills structure on the real exchange rate decision becomes particularly important.Based on the current demand for academic research in China's current economic situation,this paper first expounds the channel of the labor technology structure on the real exchange rate,including the Balassa-Samuelson effect channel and the factor endowment effect channel.Then,based on the panel data of 28 countries from 2000 to 2015 and the average educational years were used to measure the technical structure of labor in the previous literature,this paper uses the number of R&D personnel in the total population.The metrics provide an empirical analysis of the impact of the labor technology structure on the real exchange rate.The results show that the labor technology structure has a significant positive impact on the real effective exchange rate.The robustness test of replacing the metrics of the labor technical structure with the number of R&D personnel in the labor force and using the panel tool variables to deal with the endogeneity problems of the model proves the consistency and validity of the conclusions.The empirical results also test the traditional factors affecting the real exchange rate,such as the degree of openness,trade conditions,government expenditures,etc.The results are basically in line with theoretical expectations.A test of the mediating effect on the transmission mechanism of the Barcelona effect confirms that the labor technical structure will have a positive impact on the real exchange rate by affecting productivity.After that,the paper divides the sample into high economic freedom group and low economic freedom group of 14 countries according to the economic freedom index,and the results also confirm the significant positive impact of the labor technical structure on the real exchange rate.At the same time,it is shown that in countries with high economic freedom,the impact of labor technology endowments on the real exchange rate is relatively large.Finally,based on the research results and the new economic situation facing China in the future,that is,on the one hand,the problem of population aging has caused the disappearance of "demographic dividend".The advantage of cheap labor that China relies on for long-term development is gradually lost,the supply of surplus labor is slowing,and the rise of labor costs is promoted.In turn,it will exert pressure on the appreciation of the RMB;on the other hand,due to the large,improvement in the technical structure of the future labor force in China,the RMB will also have appreciation pressure in the medium and long term.The government should increase support for the non-tradable goods sector,develop the economy and education,promote the improvement of the labor skill structure of the non-traded goods sector,raise the level of human capital in the whole society,and provide a sustainable driving force for sustainable development during the economic transition period.Guide and manage the RMB exchange rate expectations,and ease the pressure on the medium and long-term appreciation of the RMB.