Research On The Impact Of Labor Misallocation On The Net Technological Sophistication Of Industrial Sectors In China

The immature factor market and low marketization degree have caused the fators of overcrowding and invalid allocation, which seriously hampered the continuous upgrading of China's industrial exports sophistication. Considering the widespread labor misallocation in China's industrial sectors, it's imperative to reveal the mechanism of labor misallocation to exports sophistication. Based on China's industrial data between 1999 and 2013, we analyze the effect of labor misallocation on exports sophistication.About the relationship between labor misallocation and exports sophistication, scholars at home and abroad is mainly focused on the influence of a distorted labor market on trade benefits and export scale and the impact of stock of human capital on exports sophistication, the relationship between labor allocation and exports sophistication is ignored. We study the effect of labor misallocation on China's industrial exports sophistication from the perspective of labor allocation. Firstly, this paper defines the concept of labor misallocation and exports sophistication, and reviews the relevant literature on labor misallocation and exports sophistication. Secondly, we illustrate the two influences of labor allocation on exports sophistication from two aspects of promoting and inhibiting. Thirdly, based on SITC-3 digit commodity trade data, we calculate the 32 industrials'Net Technological Sophistication Index (NTSI), and analyze the effect of labor misallocation on exports sophistication. Labor misallocation coefficients vary differently among industries, and there exists serious overcrowding labor in the resource monopoly industries. The empirical results show that there is a special relationship of inverted "U" shaped curve between labor misallocation and exports sophistication, namely when it's in a low level, labor misallocation has positive effect on exports sophistication, when exceeding a certain critical value, labor misallocation inhibits the enhancement of exports sophistication. There are differences of labor allocation effect on exports sophistication among industries, under the condition of higher capital intensity and proportion of state-owned enterprises, the decrease of labor misallocation has a larger positive impact on exports sophistication.Finally, based on the theoretical and empirical analysis, we puts forward some policy recommendations as follows:deepen the reform of the labor market furtherly; make more efforts to encourage and protect innovation; eliminate the institutional barriers of restricting the optimal allocation of labor; establish a reasonable pay system; introduce an effective mechanism of competition in the market, so as to reduce labor misallocation, then promote the continuous upgrading of China's industrial Net Technological Sophistication.