Study Of Mechanism Of China’s Fiscal Policy’s Employment Effects

At present, demonstration regarding employment effects of fiscal policy inforeign economics is still one of the outstanding studies among fiscal theories. Upto now, there is no explanation recognized worldwide. All studies only focus on thetheory, and lack the support of empirical researches. By reviewing the researchsituation at home and abroad, this dissertation analyzes the dominant financialeconomics theories. It finds some deficiencies and places to be improved in thestudies made by the scholars at home and abroad, mainly including: employmenteffect of fiscal policy resting on the qualitative analysis, short of the studies on thenegative employment effect of fiscal policy, fewer studies aiming at theemployment effect of non-tax revenues and not forming a systematic research onthe employment time lag of fiscal policy. This dissertation finds that researches ofChina‘s fiscal policy mainly focus on the effect of economic development andstabilizing the commodity price, but don‘t attach enough importance to that ofemployment and balance of payments.After analyzing the different employment effects of tax revenue, non-taxrevenue and non-fiscal revenue in government revenue, this dissertation constructsmultiple regression models of government revenue structure and employment byeliminating heteroscedasticity and autocorrelation and introducing the methods ofdummy variables and taking the semi-logarithmic from the variables. It also buildsfiscal revenue-employment regression model to verify the correlation between them.By using the principal component analysis and detection methods such as AkaikeInformation Criterion, Bayesian Information Criterion and goodness of fit, etc., thisdissertation analyzes the employment effects of different components of fiscalrevenue from the gravel diagram and load diagram. It concludes that the customsduty but value-added tax plays a great role in promoting employment. Afterelaborating the employment effects of value-added tax and customs duty, it findsthat China‘s collection of value-added tax has a great negative effect onemployment and meanwhile possesses the characteristic of unemployment shifting,while customs duty has the attribute of promoting employment. However, China‘scustoms duty policy has the problems of weak and excessive employment protection, and only reflects a rough thinking, which does not adopt systematic customs dutycollection system aiming at forward, backward and homonymous integrationproductions of relevant industries.By building the regression model of total financial expenditure andemployment, this dissertation finds a positive correlation between financialexpenditure and employment. It means that the less financial expenditure will havea stronger pull on employment, while the more finance expenditure will have aweakening pull on it. In order to determine how the major components in financialexpenditure affect employment and calculate the correlation coefficient of thedetails of financial expenditure and employment, this dissertation discusses theemployment effect mechanism of the five kinds of expenditures, evaluates theiremployment effects and constructs their regression models with the quantity ofemployment respectively by taking financial expenditures on science andtechnology, education, social security, fixed asset investment and administrativecost as the main study factors based on the correlation coefficient. By eliminatingthe heteroscedasticity and multicollinearity of the variables of financial expenditurestructure, using the Akaike Information Criterion, Bayesian Information Criterion, Fstatistics and chi-square statistic, adding dummy variables and adopting themethods of Granger causality test and backward regression, this dissertation buildsthe time lag model of financial expenditure affecting employment to determine thetime lag period of employment effects of main financial expenditures.This dissertation states the fiscal policy‘s impact on employment fromcompilation and final account of financial budget. It analyzes the characteristics ofthe system of tax distribution, the transfer payment policy and the proactive fiscalpolicy in the existing fiscal policies, explores their employment effects respectivelyand gives the corresponding evaluation. After making an empirical analysis on theemployment effects of the current fiscal policy and doing a targeted Grangercausality analysis about non-financial education investment and non-budgetaryfixed assets investment, it builds the fiscal policy-employment regression model byusing test methods such as F statistics, chi-square statistic, the Akaike InformationCriterion and Bayesian Information Criterion to make the fiscal expenditurevariables stepwise regress and removing the insignificant variables. On this basis,this dissertation optimizes the time lag model of financial expenditure affecting employment, and makes the systematic evaluation about how fiscal policy affectsemployment.By analyzing the current situation of supply and demand of employment inChina, it finds that the registered urban unemployment rate currently used in Chinahas already been unable to reflect the actual employment in China. It is predicted bythe gray forecasting model that the number of labor supply in China in the futurewill continue to increase and that the employment problem will persist. Thisdissertation demonstrates that insufficient demand theory is inappropriate to be usedas the dominant theory to solve the unemployment problem in China, anddetermines that development economics theory and supply theory are suitable. Itputs forward the ways that fiscal policy affects employment under China‘s currentnational situation, which includes the regulation of supply of human resources, theoptimization of industrial structure, redistribution of income and the level ofadministrative efficiency. It introduces the international experience of fiscal policyin promoting employment, and elaborates it from four aspects: the diversification ofeducational investment, tax optimization, the improvement of administrativeefficiency and performance budgeting. It also proposes the options to put intopractice, including optimizing fiscal revenue, restructuring financial expenditureand expanding the demand of flexible employment. In order to better solve theemployment problem and play a better role, the fiscal policy must be effectivelycombined with international trade policy, monetary policy and industrial policy.The subject of this dissertation comes from the main problem facing theChinese government. Since the accession to the WTO, China has pushed theemployment problem into the market. Therefore, the fiscal policy must carry outmacro-control over employment fluctuation caused by economic fluctuation. Thetheoretical results of this dissertation will provide a basis for the government tomake fiscal policies to promote employment.