Global Value Chains Trade and the Demand for Chinese Labor

Tao Ma () and Bin Sheng ()
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Tao Ma: Institute of World Economics and Politics Chinese Academy of Social Sciences
Bin Sheng: Institute of International Economics Nankai University

Global Economic Observer, 2017, vol. 5, issue 1

Abstract: Developed countries have recently expanded the outsourcing production to China by transferring intermediate inputs with lower value-added, given the abundant and low-cost labor resources in China. Therefore, intermediate products trade is increasing rapidly, which is major composition of global value chains trade. The change of trade pattern not only increases the demand for various labors in China, but also leads to the change of labor demand and employment stability in labor market. This paper aims to study the effect of intermediate products trade on labor demand in total Chinese industry and sub-sectors by using dynamic panel data model. The results indicate that the intermediate product exports increase the labor demand, while the impact of intermediate product imports on labor demand is negative. Meanwhile, intermediate products trade has increased employment instability and unemployment risk in Chinese manufacturing sector.

Keywords: Global Value Chains; Intermediate Products Trade; Labor Demand; Dynamic Panel Data (search for similar items in EconPapers)
Date: 2017-06
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