Nonlinear Analysis Of Employment Effect Of China’s Foreign Trade

Through light on the effect of trade on China’s employment is of greatimportance in both theoretic analysis as well as real policy consideration. Sincereform and opening up, China’s foreign trade leaps and bounds, and the employmenthas increased year by year. How to determain the relationship between the foreigntrade and employment is a hot issue, focused by the academia.This paper try toanswer if the foreign trade has an effect on China’s employment, what is the effectand what is the transmission mechanism of foreign trade affecting employment? Allof the problems are what the paper attempt to reslove. Theorical analysis is alwaysthat hundred schools contend. Realitively speaking, empirical analysis is morepersuasive. Of course that we put forward the issue based on related to theories. Sofrom the angle of empirical analysis, associated with theorical analysis, the paperdiscusses the effect of foreign trade on employment.This paper employs ARDL model proposed in Li and Lee (2010) to testing forthreshold cointegration between these two variables in a multivariable framework.Empirical results show that there exists a threshold cointegration relationship amongemployment with import, export, real average wage, real output, while the deviationfrom long-term equilibrium has been proved to be asymmetric. Besides, import andexport are found to play different roles in the two intervals divided by threshold value.The effect of import on employment’s adjusting to the equilibrium is rather weak inone interval but export has the correcting effect. In contrast, import enlargesemployment’s deviation from the equilibrium, while export help it returns to theequilibrium in the other interval. Detail explanations for the results are given in thecontext.