Input trade liberalization and manufacturing job dynamics: micro evidence from China’s entry into WTO

【Author】

MAO Qilin;XU Jiayun

【Institution】

Nankai Institute of International Economics, School of Economics, and Research Center on Multinational Corporations, Nankai University;Center for China Studies, School of Public Policy and Management, Tsinghua University

【Abstract】

How do trade policies affect employment? Based on the quasi natural experiment of China's entry to the WTO in 2001, this paper analyzes the impact of input trade liberalization on Chinese manufacturing firms' job dynamics by using the difference in difference method. The research has the following results. (1) Input trade liberalization has positive influence on firms' net growth of employment through “improving job creation”and “reducing job destruction.” (2) The effects of input trade liberalization on firms ' job dynamics are significantly heterogeneous among firms with different productivity levels. It promotes the job creation of high productive firms, while contributes to the job destruction of low productive firms and increases the probability of exiting from the market for low productive firms. (3) A good institutional environment is conducive to strengthening the positive influence of input trade liberalization on manufacturing jobs dynamics with both intensive margin and extensive margin. (4) The improvement of the efficiency of job reallocation is an important channel for the positive effect of input trade liberalization on the overall productivity growth of manufacturing. Our results suggest that, it is vital for government to carry out external trade liberalization reform and internal market-oriented reform simultaneously to cultivate employment and achieve industrial transition and upgrading.

【Keywords】

input trade liberalization;job creation;job destruction;job reallocation;difference in difference

References

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Total: 44 articles

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