The Effects Of Technology Progress On Employment In China

Growth, employment and the price level are macro economy target variables, and also result variables about macro economy movement. Their conduction mechanism constitutes the macro economy relation. The typical macro economy relation is"the characteristic fact", which is described by the economy cycle theories, representing the general economy cycle motion regulation; Contrary, non-typical macro economy relation is disaccord with"the characteristic fact", bearing the characteristic of surmount the general law. The macro economy relation in China is obvious of non-typical model. After opening and reforming, GDP grows rapidly, but the employment grows slowly. Since 90's of 20 centuries, the price level is low, and it is not consistent with the economy cycle. In fact, the high growth and low employment and low price level, is a worldwide phenomenon. Therefore, how to explain these non-typical macro economy phenomenon, become a question deserving to study further.The growth theory and the cycle theory explore the regulation of the typical macro economy relation, but they do not explain the non- typical macro economy relation, say nothing of to explain two kinds of macro economy relation. Hence this paper constructed a theory about the technology progress employment effect. It can explain two kinds of macro economy phenomenon, so makes up the fracture between the existing theories and the important economy phenomenon.According to the generalized definition and"Solow Surplur"method, we have calculated the TFP of China from 1978 to 2005, and have examinated the relations between the technology progress and GDP growth rate, the employment flexibility making use of the cointegrating test and Granger test of causality. We discovered that the technology progress is the main result of"high increase and low employment"in China.This put forward a question for the next text: how does the technology progress result in"high increase and low employment". To answer this question, we build a theory about the technology progress employment effect.Based on labor market, we reviewed the influence of technology progress on the level of employment from the labor supply and labor demand. Because the influence of technology progress on the labor supply is ascertain, the employment level is decided by labor demand. So we defined the aggregate employment effect, it includes employment creation effect and employment loss effect.The technology progress employment loss effect indicates the technology progress lowers the labor demand. The employment loss effect performances two aspects: the technology progress increases the rate of Labor production, and reduces employment post and lowers the labor demand under the certain production scale. The technology progress raises the rate of capital production and labor production at the same time, and form different technology bias, and capital substitute labor. So labor demand is descend. The technology progress employment creation effect means, technology progress creates employment opportunities through a relevant path, and increase employment post and labor demand. It is realization by extension production scale and extension economy scope.The employment creation effect and employment loss effect are usually not equal, and they are dynamic, as a result the technology progress employment aggregate effect exist three kinds of states: Positive effect, negative effect and zero effect. Extending to the product market from the labor market, we further remove another macro economy variable which influences labor demand. We discovered that production scale is the basic macro economy variable deciding labor demand. The influence of production scale on labor demand is ascertained, and labor demand changes with production scale expanding and shrinking.Comprehensive the influence factors of two markets, we build the technology employment effect theory from labor demand. The production scale is the basic factor decided labor demand, but the influence is ascertained. So the equilibrium employment level is decided by the technology progress employment aggregate effect. We call this kind of analytical frame technology progress employment effect theory.The technology progress employment effect theory can effectively explain the changes of the macro economy relations. According to the theory about the technology progress employment effect, production scale, the technology progress and the situation of product market are the basic power determined the changes of the macro economy relations. Their different combinations result in different macro economy relations.The production scale extension will accelerate the economy growth, and will still increase the employment; the technology level exaltation will promote economy increase, but produces the indetermination to the employment. As a result the production scale extension and the technology level exaltations raise the economy growth speed necessarily, but with it mutually may be a high employment, or likely to be low employment, Namely high growth high employment or high growth low employment. The wage decided by the employment level is a main cost factor that constitutes the price level. The product market equilibrium state decides the price level by imposing the wages on. Therefore, if the labor market low employment and the product market be subjected to supply stipulation, there are low employment, low wages and high price level; If the labor market high employment and the product market is controlled by product demand, there are low employment, low wages and low price level. Contrary, if the labor market high employment and the product market is controlled by product demand, there are high employment, high wages and high price level; If the labor market high employment and the product market be subjected to supply stipulation, there are high employment, high wages and low price level. So the technology progress employment effect theory has explained the typical and non- typical macro economy phenomenon.We calculate the aggregate effect of technology progress employment according to the data of China, the result showing, technology progress result in employment net loss, reducing employment 30,000,000 to 35,000,000 averages every year, offsetting the raised employments by production scale extension. So the employment increases slowly when the GDP grows fast. Under the circumstance of the employment increases slowly and the wage level is low, the product market appears the situation of supply exceeds demand, as a result the price level is always overcast. So the non-typical macro economy phenomenon"high growth, low employment with low price level"has been shaped.