Research On The Employment Effect Of Information Technology Progress In China

The relationship between technological progress and employment has alwaysbeen a topic being discussed in the field of economics. Since 1980 s, a digitalrevolution led by information technology has brought great changes in productionmode and lifestyle, and the progress in information technology is gaining moreinfluence on employment. At present, a mature knowledge system has not beenestablished on the subject of information technology, which has a short developmenthistory and changeable evolvement. On the other hand, employment is a focus issuein the Chinese economy featuring industrial structure transformation and upgrade,which shall be promoted by information technological progress. Different fromresearches on the employment effects of overall technological advancement, thispaper takes a unique perspective of information technology progress to exclusivelystudy the influence of information technology on employment in consideration of itstechnical characteristics.This paper studies the employment effect of information technology progress inChina. Apart from the introduction, it has seven chapters arranged in four parts. Part I,including Chapter I, provides a theoretical basis through reviewing theories and thelatest research findings on this subject both at home and abroad. Part II, as ananalytical framework, consists of Chapter II, III and IV. Part III is an empirical studyincluding Chapter V and VI. Finally, Part IV, i.e. Chapter VII, gives a conclusion andsuggests future trends.This paper makes breakthroughs in analyzing the technical characteristics,micro-foundation and acting mechanism of information technological progress thataffects employment. It builds an analytical framework of “technical characteristics –micro-foundation – acting mechanism” to analyze the information technologicalprogress effect in a progressive way from a micro view to a macro perspective.Technical characteristics, including a self-accelerating dynamic mechanism, ageneral-purpose nature, a skill-based property and a new “technology – economy”pattern, are summarized by reviewing the developing route of information technology.This paper studies the influence of information technological progress on the labormarket based on analyzing how such advance affects vocational technical features.Information technological progress reduces the transaction cost in the market, andchanges companies’ organization pattern, as new business models includingoutsourcing or super-large network organizations, horizontal organizations,super-mini multinational enterprises, and new business or partnership models weedingout organizers emerge. The progress also changes the human resource investmentmodel by reducing human resource investment cost and polarizing labors. Skilltalented labors become independent, winner-take-all and super stars come intoexistence, and the number of free labors increases. The capacity of labor market isenlarged due to extension in objects of labor and emergence of individual innovationsand new employment patterns. Informational asymmetry in the labor market isdecreased so that the matching between labor forces and jobs is facilitated, theefficiency of labor market is enhanced, and market instability increases. Based ontechnical characteristics and micro-foundation, and combining theories on theemployment effect of information technology progress, this paper studies actingmechanisms of damage effect, promotion effect and polarization effect, and conductsmathematical derivation. The damage effect comes into play in two ways. On the onehand, given the same scale of production, progress in information technologyimproves productivity, and reduces labor demand. On the other hand, it changesenterprises’ value chain and adjusts the industrial structure; as a result, someprofessions are eliminated, and employment deteriorates. While the nature of thedamage effect lies in productivity improvement thanks to technological progress, thenature of the promotion effect rests with deepened division of labor. The old productmarket is expanded, and the new product market emerges. The promotion effectcomes into play through the “income effect” and “price effect” in the old productmarket, and the “benefit effect” and “substitution effect” in the new product market.Finally, the polarization effect is resulted from skill-biased technological progress.The employment and income of labors with advanced skills are improved; however,those of labors with intermediate skills and low-level skills deteriorate. Labors withintermediate skills are hit hardest.In the empirical part, this paper adopts the method of statistical analysis tostudy the employment effect of information technological progress in developedcountries. Researches indicate that information technology progress boostsemployment in developed economies. The employment effect changes in differentstages with the promotion effect decreasing progressively. Technical advance shows adifferent effect in the information service industry and the manufacturing industry,and the service industry plays a critical role in enhancing employment and resistingbusiness cycles. Moreover, the employment effect varies in different kinds ofprogresses. However, information technological progress makes almost no differencein filling the income gap as it aggravates the polarization of the labor market andmakes wealth possessed by the few to a greater extent. These phenomena areconnected with information technical characteristics and policy systems in developedcountries. Based on the above analysis, this paper also conducts statistical analysisand empirical study on the employment effect of information technological progressin China. Statistical analysis suggests that the information industry, although notmature, plays a key role in absorbing labor force in China, and employees in thisindustry possess higher-level skills and generate more income than average. Theapplication of information technology in the retail sector has boosted employment,which has become a major channel to take in surplus rural labor forces. And theempirical research indicates that information technological progress has lowered therising capital-labor ratio and improved employment significantly. There is an innatebond between information technology and the service industry, a key sector in theChinese industrial transformation and upgrade. Information technological progresspositively influences employment in the service industry. It also raises labors’ incomeand widens the regional income gap. The employment effect of domestic informationtechnological progress is connected with technical characteristics in the early stage ofinformation technology development in China.Based on theoretical analysis and empirical research, this paper proposes policysuggestions in terms of developing information technology to boost employment, andmakes forecasts on future trends of information technology and its influence onemployment.