44th International Academic Conference, Vienna

FDI AND EMPLOYMENT STRUCTURE IN CHINA: HETEROGENEITY ACROSS INDUSTRY, REGION AND TIME

ZIYAN FU

Abstract:

As one of the engines for economic growth, foreign direct investment has made an important contribution to China's economic growth. China becomes the second largest foreign direct investment country in the world. By using the 2006-2016 provincial panel data to establish a fixed effect model, this paper analyzes the impact of FDI on the scale of employment and employment structure in China. The empirical results show that, among the 12 industries selected in this paper, FDI has a significant impact on the employment scale of Chinese residents, and it still established after controlling regional economic growth, population size, and industrial structures. This paper further explored the heterogeneity of FDI on employment structure, the empirical results show that FDI has a different effect on the growth rate of employment of various industries. For the real estate industry, the driving effect of FDI is significantly higher, but for cultural entertainment and sports industry, this effect is relatively low. In addition, from the perspective of regional heterogeneity, FDI has more significant impact on the employment structure of the construction industry in the eastern region; for the western region, FDI has more significant impact on the employment structure of the leasing and business services industries; while for the midland region, the employment structure of the wholesale and retail industry is more obvious. The findings of this paper provide us with further understanding about the FDI's structural transformation, employment scale, and employment structures in China, it also provides a rich micro-foundation for policy implications such as improving the business environment, attracting foreign investment, and promoting employment.

Keywords: FDI, employment scale, employment structure, regional heterogeneity, industry heterogeneity