An Empirical Study On The Impact Of Financial Development On Employment In China

The 19 th National Congress of the Communist Party of China,held in October 2017,noted that employment is the greatest livelihood.Outline of the Thirteenth Five-Year Plan for National Economic and Social Development of the People's Republic of China,published by the State Council in 2017,emphasizes to actively develop industries and enterprises with strong employability.The US.Sub-prime crisis of 2008 and the subsequent increase of unemployment,as well as the events in which financial markets adversely affected employment,made the analysis of the employment impact on financial development an academic frontier.The influence of financial development on the operation of real economy has always been a hot topic for theoretical researchers and policymakers.Only by focusing on the relationship between financial development and employment can we fully understand the effect of financial development on the real economy.At the same time,from the point of view of employment research,if the role of financial development is neglected,the decision mechanism of employment can't be thoroughly understood.In conclusion,it is necessary to study the relationship between financial development and employment in China from both theoretical and practical perspectives.Pissarides,one of the Nobel Prize winners in economics in 2010,isbest known for his search and matching theory of labour market and macroeconomic interactions.The search matching model is known as classic model of employment analysis.In the market environment with incomplete information,the search matching model based on additional credit constraints and the relevant mathematical model concluded that financial development has a significant impact on employment.Considering the actual situation of financial development and employment in China,on the basis of the existing research theories and methods,this paper measures the impact of financial development on employment from the national level,the regional level and the level of different ownership enterprises,which aims to provide a scientific basis for employment promotion function of financial support.First,the impact of financial development on employment is analyzed based on different cycles using the annual time series data at the national level.On the one hand,based on the autoregressive distribution lag model,the relationship between financial development level and employment level is measured and found the positive relationship between them.On the other hand,based on the error correction model,the paper measures the short-term influence of the financial development on the employment rate.The result shows that the unbalanced error item has the correction effect on the short-term fluctuation,which makes the long-term positive influence relationship between the financial development and the employment level in China.In short,whether in the long term or in the short term,China's financial development has a positive impact on employment rates.To achieve China's "steady growth and job security",the government needs to deepen its financial reforms to better promote employment in the country.For example,the government should promote financial marketization,so that the financial market can service intermediaries and institutional bodies,meet the diversified financial demand of consumers and investor and promote employment growth in China.Secondly,based on the search matching model of additional financial constraints,the paper demonstrates the impact of financial development on employment.Then,based on the smooth transfer model with financial development level as the transfer variable,the asymmetric effect of financial development on employment is measured.With different financialdevelopment level,the effect on employment is obviously different.For example,the positive impact of financial development on employment is more significant at lower levels of financial development than at higher levels of financial development.That is,while the financial development of China has played a positive role in employment,the higher financial development level,the weaker effect of it on employment.Under The new normal of China's economy,China's economy is facing a high level of financial development,but it is not enough to increase its employability.Therefore,in order to make better use of financial development to promote employment,the government authorities need to promote the reform of financial policy from the point of view of reducing the financing constraints faced by SMEs.Third,based on the panel data at the provincial level in 31 regions of China,the paper analyzes the regional differences of the influence of financial development on employment level.On the one hand,China's financial development has a significant long-term positive impact on employment.Moreover,the long-term unbalanced error has an effective adjustment on short-term change of employment level.The change of financial development level has significant positive influence on the change of employment rate.On the other hand,the panel model constructed for the Eastern,Central and western regions of China shows that the following results: first,the level of financial development plays an important role in promoting employment in the Eastern,Central and western regions of China;second,in the Eastern,Central and western regions of China,there are significant differences in the role of financial development in promoting employment.Therefore,while implementing policies to promote employment through financial support,the government needs to pay attention to the differences in employment impact of financial development in the Eastern,Central and western regions of China,so as to achieve the goal of promoting employment more effectively.For example,the strategy for the development of the western region,the preferential policies of the ethnic areas in the western region and the ongoing construction of the Silk Road Economic Beltall playa very positive role in the financial development and employment promotion of the western region.Fourth,the paper measures the impact of financial development on employment at the enterprise level.The paper analyzes the differences between the financing constraints of state-owned manufacturing enterprises and those of private manufacturing enterprises in China.In the long run,the financial development level of the state-owned manufacturing industry and the private manufacturing enterprise has positive and significant influence on the employment level on the one hand,but the influencesof owned manufacturing and private manufacturing enterprises are different on the other hand.In the short term: on the one hand,the change of financing constraints of state-owned manufacturing and private manufacturing enterprises has a positive influence on the change of employment level;on the other hand,there is a long-term positive relationship between the financing constraints and the employment levelof state-owned manufacturing and private manufacturing enterprises though the unbalanced error of adjustment.For both state-owned and private manufacturing enterprises,as their financing constraints ease,they can create more jobs and effectively boost employment in China.Government authorities need to unleash the dynamism of financial markets: makeboth state-owned manufacturing firms and private manufacturing firms to get funds easily;bring more welfare by financialso that entrepreneurs have the incentive to create more jobs and promote employment in China.Fifth,from the dimension of frequency domain,the influence of financial development on employment at the national level is measured from the aspect of short period fluctuation,medium period fluctuation and long-term trend,the influence of financial development on employment at the regional level is measured,and the influence of financing constraints on employment of enterprises of different ownership is measured.From the national level,China's financial development has played a positive role in promoting employment.At the regional level,the effect of promoting employment has gradually diminished in the economically developed areas of the eastern part of the country,as financial development has increased.In the central and western regions,the promotion of employment has been increasing as the level of financial development has increased.In terms of different ownership,as financing constraints ease,state-owned manufacturing enterprises focus more on investment in technological research and development,while the development of private manufacturing enterprises is more conducive to employment promotion.