Trade Liberalization, Employment Structure Change and Productivity Growth


2020-07-06 03:13

Liu Ruiwen,Xu Shu,Zhang Chuanchuan
China Industrial Economics

Abstract: This paper examines the effects of China's trade liberalization on employment structure change and assesses the subsequential aggregate productivity gains. The results show that input tariff reduction induces 5.32percent workers to allocate from state-owned sector towards non-state-owned sector, contributing to 8.56 percent of the overall between-sector labor reallocation from 1998 to 2007. We also find that tariff reduction benefits non-ate-owned enterprises more through reducing the cost of their intermediate inputs to a larger extent, and easing their financial constraints. The trade-induced shift of workers across the two sectors in our sample period accounts for 7.51 percent of the productivity growth caused by cross-firms' labor force reallocation, and 1.46-1.85 percent of the overall productivity growth of the manufacturing sector. These findings suggest that breaking the barriers of factor mobility, reducing the cost of labor mobility, optimizing the allocation of resources across different sectors,establishing sound financial systems and improving credit inequality are critical to gaining the bonus of economic reform. This paper provides new evidence showing that it is necessary for China to optimize its resources allocation and to upgrade its industrial structure. It also provides one new perspective for understanding China's employment structure change.

Key Words : trade liberalization ; input tariff ; employment structure change ; productivity growth

The Chinese version appeared in China Industrial Economics, 2020(06).



2020-07-06 11:13
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