Analysis Of The Impact Of Labor Market Distortion On The Export Trade Of China

Since the reform and opening up, China’s export trade has gained rapid development, which leads to the rising international trade status of China. However, because of the market segmentation and policy interventions, China’s factor market has not kept pace with the product market in the market-oriented reform, resulting in the widespread phenomenon of factor market distortion. What has been enhanced is the price competitive advantage of our products in the international market on account of factor market distortion, therefore, the export trade of our country has been rapidly expanded. The present researches of export trade mainly focus on the impact of factor market distortion and have neglected the spatial correlation of trade distribution. Nevertheless, in terms of a single factor market, this paper analyzes the effect mechanism of labor market distortion on export trade of China using the spatial econometrics method, and provides a new perspective for the study of China’s export trade growth.Firstly, this paper reviewed the relevant researches and theories about export trade and labor market distortion, Secondly, it analyzed the current situation and contributing factors of China’s labor market distortion, and used the C-D function to measure the distortion degree of factor market of China. In the end, this paper investigated the relationship between labor market distortion and export trade using the method of empirical analysis. The result shows that severe distortion exists in the factor market of our country, and the distortion level gradually boosts from the western region to the central region then to the eastern region. It also indicates that there is a spatial correlation between the distribution of export trade, and the correlation mainly presents the spatial convergence effect. We also found that compared with the capital factor, the market distortion of labor factor is the predominant reason for the growth of China’s export trade which means that the distortion of labor market is an indispensable factor to the creation of China’s export miracle.