An Analysis About The Employment Effect Of Financial Development And The Conductive Mechanism

The GDP has greatly increased with the deep reformation of markets since the reform and open-up policy in 1978. Meanwhile, financial market has been developing and perfect, as M2/GDP index, our country has caught up with the developed countries. But the unemployment of china has increased obviously, and the unemployment phenomenon gradually exposes. From the supply angle, there are three aspects pressures: one is the more labors; another is surplus countryside labors want to get a good job in the urban; the last is the ordinary works have been laid off in the enterprises. From the demand angle, the increasing of economy has a low effect to employment, and the flexibility of increasing employment always keeps a decline trend in the few years.This paper will connect these two economical phenomena together and give a deep research whether the development of financial effects employment through theory and demonstration. Basing on traditional analysis frame of the Cobb-Douglas function ,this paper sets up a investment,progress of technology, wage level, and industrial structure effecting employment's mathematical model . Meanwhile, through the LA—VAR,Impluse responses and Variance decomposition, it analyses the relationship of financial development with all affecting employment factors , such as investment,progress of technology, wage level, and industrial structure from 1978 to 2003. We get a conclusion that the financial development gives a deep effect to employment by investment, wage level, and industrial structure but not by progress of technology. If we are only from the relationship of financial development and employment, the scale of financial development is not remarkable to employment by M2/GDP index , but the efficiency of financial development is special remarkable to employment by XD/GDP index. At last, the paper gives a deep analysis about the reasons and puts forward some relative policies and advices which include setting a financial supporting system, accelerating financial marketing, making a technological innovation by improving the financial structure and accelerating the adjustment of industrial structure.