A Study on the Trend of Technological Progress and Employment Growth in China’s Manufacturing Industry Under Openness
ZHONG Shi-chuan1,2
1.Institute of City Strategy Studies, Guangdong University of Foreign Studies, Guangzhou 510420, China; 2.Institute of Guangdong, Hong Kong and Macao Development Studies, Sun Yat-sen University, Guangzhou 510275, China
Abstract Adopting the CES production function, this paper discusses the relationship between technological progress and employment growth. When factor market is perfectly competitive, employment growth is decided by both economic development and technological progress. On this basis, this paper uses the data of China’s manufacturing from 1987 to 2014 for an empirical testing. The results show that the substitution elasticity of Chinese manufacturing is between 0.4 and 0.6, which means capital and labor are complementary. Economic development significantly contributes to employment. Capital investment discourages employment because of an emphasis on capital through promoting technological progress. After the introduction of FDI and international trade, the curbing effect of capital investment on employment growth in manufacturing is stronger while FDI and international trade can effectively promote employment through technological progress. Further empirical analysis shows that capital investment inhibits employment in labor-intensive industries, but promotes employment in capital-intensive and technology-intensive industries. Therefore, to promote employment, it is necessary to strengthen independent innovation, to actively develop labor-oriented technology that matches national resources, to reduce the rate of capital substitution of labor and to substantially take in labor.
ZHONG Shi-Chuan. A Study on the Trend of Technological Progress and Employment Growth in China’s Manufacturing Industry Under Openness. Economic Survey, 2018, 35(2): 071.
2018, Vol. 35 
