An Empirical Study On The Trend And Effects Of Employment Elasticity In China

It has witnessed a golden period of China's economic growth since the reform and opening in 1978, while the employment didn't increase as the same pace, which makes declining employment elasticity and great job hunting pressure in the labor market,a 6.2% real unemployment rate.China's growth path did not show itself what we found in Okun's Law, so why? For the reason, the author calculates China's economic growth rate from 1979 to 2007, the employment growth, then derives the employment elasticity, which again proves a decreasing trend, especially for the years of mid90th. Further, industrial employment elasticity is computed, from which we can see the employment elasticity takes on a very different situation that is elasticity of primary industry is the lowest and dropped to below zero from 1992; elasticity of secondary industry was high in the 80th, then from reform of state-owned enterprises, it fell sharply; tertiary industry has the biggest employment elasticity for an average of 0.295 between 1979 and 2007.After that a comparison among China's several provinces is made. Guangdong Province has the highest elasticity and Hubei Province comes next. As the employment elasticity of some provinces grows from 2002 to 2005, the elasticity of Shanxi Province decreases while that of Henan Province and Sichuan Province almost keeps stable. Then the urban and rural employment elasticity is accounted, the urban area has a much higher elasticity and it's not dropping; on the contrary, things in the rural area are not so optimistic, a violent falling trend is observed.For investigating what affects China's employment elasticity, an OLS model is constructed, which draws the conclusions that the increase of non state-owned employee can greatly increase the employment elasticity; GDP per person has a slightly positive effect to employment elasticity while the effect of wage is negative. At last, some suggestions for boosting employment, increasing elasticity, relieving the employment pressure have been given.