Analysis On Employment Effects Of Service FDI

With the transition of economy, service industry, which has the most output value in three major industries, plays a more important role in China economic development. Meanwhile, economic globalization and trade liberalization get deepening, service FDI inflow increases steadily in China and becomes the industry that absorbs the most FDI inflow. However, current employment situation remains severe. To solve this problem, we should not only rely on domestic resource, but also FDI from oversea. Given that service industry has great potential in absorbing labor force as well as the essentiality of service FDI in service industry, analyzing the effects of service FDI on employment has great practical significance.This paper uses both theoretical and empirical methods to demonstrate the effects of service FDI on employment. First of all, it divides these effects into two parts, including employment quantity and employment structure. The influence of service FDI on employment quantity includes direct influence and indirect influence. Direct influence introduces how service FDI changes employment quantity by affecting sectors it flows into directly. Indirect influence indicates how service FDI affects other relevant companies, leading to employment quantity change indirectly. The influence of service FDI on employment structure analysis from two parts:the influence of employment industry structure and quality structure. The employment industry structure focuses on how service FDI affects the situation of the employment in the whole service industry. As for the influence of employment quality structure, it emphasizes on service FDI has different effects on labor force of different educational level.In the part of empirical analysis, this paper uses dynamic panel data to analysis the employment effect. As is shown in the results, service FDI has a slight negative effect on employment quantity, therefore, service FDI restrains the increase of employment quantity. In the part of employment structure, from the aspect of employment industry structure, firstly this paper defines labor force who takes college education and above as skilled labor force. Service FDI has a positive effect on skilled labor force. It increases the quantity of skilled labor force. From the aspect of employment quality structure, this paper divides labor force into three parts based on educational level. They are physical labor force, trained labor force and knowledgeable labor force. The empirical results turn out that service FDI has significantly positive effects on knowledgeable labor force. The effects on physical labor force are significantly negative. So does the trained labor force but not so obviously. Generally speaking, service FDI promotes the employment industry structure and quality structure.After the comprehensive analysis, the results are clear that although service FDI imposed negative effects on employment quantity, it still helps to optimize the employment structure. Therefore, this paper puts forward advice and suggestions on how to guide FDI inflow. All the moves are to make service FDI play its positive part in increasing employment quantity and promoting the optimization of employment structure.