The Research Of Foreign Direct Investment Influence On Informal Employment In China

Since 1980s, the world economy has been changed greatly. The progress of economic globalization is accelerated, and the market economic system almost covered all economic system over the world, which leads to continued mutually-beneficial economic cooperation and rising interdependence among the world's countries. In such international political and economic background, FDI works an important role in countries' economic activities. Though the international economics have long been having a view that trade openness accelerates economic growth through the allocation of resources and technological advances, there are few studies on how they influence the formal employment and the informal employment, even the unemployment, especially on the effects of FDI to the informal employment of the host countries. So this paper mainly discusses the influence of FDI to the informal employment of China based on both theoretical and empirical study.Based on the global economy and the problem of employment in developing countries, this paper studies the effects of FDI to the informal employment in the view of employment scale, regional structure and employment quality. First of all, this paper analyses the current situation of them after defining the connotation of FDI and informal employment. Then we use the basic economic theory to analyze the function mechanism of FDI to informal employment in quantity, region and quality; at last the paper make an empirical study on the influence of FDI to informal employment from both static state and dynamic state. In the part of employment scale and regional structure, the paper uses the Cobb Douglas function to deduce an empirical model about the relations between FDI and the informal employment, select panel data of 29 provinces in China except Tibet and Xinjiang in 1997-2013 periods, and empirically analyze how FDI influence the informal employment. While in the employment quality section, we set a measurement model on the base of Mincer's Wage Function and then use the CGSS database to study the empirical result.Through the research, it firstly shows that FDI can make a positive creation effects on informal employment as well as promote the development of informal employment, while the influence is limited in current period, in other words that time-lag effect is not obvious. Secondly, the effect of FDI to informal employment is more significant in the middle and western area than that in the east. Though FDI in the eastern area distribute more than others, middle and western area obviously need more FDI. Thirdly, FDI pull up the informal labor wage, increase the informal employment quality in our country. Therefore, this paper presents some relevant policy recommendations:first of all, we should actively introduce FDI to increase the informal employment opportunities and improve informal employment quality in China. Then, the government can guide the FDI transfer to the middle and western area to accelerate the development of local informal employment.