Working Paper: NBER ID: w13552
Authors: Robert C. Feenstra; Chang Hong
Abstract: Dooley et al (2003, 2004a,b,c) argue that China seeks to raise urban employment by 10-12 million persons per year, with about 30% of that coming from export growth. In fact, total employment increased by 7.5-8 million per year over 1997-2005. We estimate that export growth over 1997-2002 contributed at most 2.5 million jobs per year, with most of the employment gains coming from non-traded goods like construction. Exports grew much faster over the 2000-2005 period, which could in principal explain the entire increase in employment. However, the growth in domestic demand led to three-times more employment gains than did exports over 2000-2005, while productivity growth subtracted the same amount again from employment. We conclude that exports have become increasingly important in stimulating employment in China, but that the same gains could be obtained from growth in domestic demand, especially for tradable goods, which has been stagnant until at least 2002.
Keywords: Exports; Employment; China; Domestic Demand
JEL Codes: F10; R15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| export growth (F43) | urban employment (R23) |
| domestic demand (R22) | urban employment (R23) |
| productivity growth (O49) | urban employment (R23) |
| export growth (F43) | employment gains (J68) |
| domestic demand (R22) | employment gains (J68) |
| export growth (F43) | employment growth through domestic demand (J23) |
| productivity growth, changes in industry composition (O49) | employment effects of exports (F10) |