The Empirical Analysis Of China's Employment Elasticity And Policy Selection In The Future

This paper is mainly to explore the relationship between economic growth and full employment,two of the four macroeconomic policy goals.As we all know,Okun's law,an important law to study the relationship between them,points out the unemployment rate will decrease as the economy grows fast;conversely it will increase as the economy grows slowly.Accordingly we can learn that there's a positive correlation between the economic growth and the employment,which means the economic growth will promote the growth of employment.The economic development in China has made remarkable achievements since 1990s.However,the effect of promoting employment has not achieved satisfying results.Employment is very important to the national economy and the people's livelihood,which concerns vital interests of people and the grand goal of building a moderately prosperous society.We must pay attention to the employment while developing the economy.And the equal attention to the development of the economy and the improvement of the employment is also consistent with the goal of building a socialist harmonious society.In order to explore whether the development of the economy can promote the employment,we use the employment elasticity as a tool to explore the relationship between them.The employment elasticity,as its name implies,is a measure of the percentage change in employment associated with a 1 percentage point change in economic growth.It is a key indicator of coordinative development of the economy and the employment.Through the measurement of the employment elasticity in China,the level of ours is low compared to the developed countries.And there's still a big space for us to promote the employment elasticity.It also shows that the rapid growth of China's economy does not make the employment situation better.It is also related to our performance evaluating standards which pursuit the economic growth excessively while ignore the increasing of the employment.In order to find the deep reasons about our economy since 90s showing "high growth and low employment",this paper firstly introduces the related theories of economic growth,employment and the relationship between them.Then,based on these theories it empirically analyzes the relationship between economic growth and employment of our country,calculates the employment elasticity of our country through the methods of definition and mathematical model and analyzes the advantages and disadvantages of the two methods,and also do the regression analysis on the different time and different industries to study the effect of different development stages and different industries on employment elasticity;Thirdly,the comparative analysis from the opposite of employment-unemployment angle is done to verify the applicability of Okun's Law in China and the United States.From it we could know that it's applicable in the United States but not in China,and therefore we need do in-depth analysis to find the reasons for this phenomenon.Finally,an empirical analysis of the employment influential factors in other dimensions has been done.Based on the theories and the research of the domestic famous scholars,some related factors on employment elasticity are listed which include per capita income levels,resource endowments,capital stock,industrial structure,technological progress and economic system.When selecting these factors,I have considered the data availability,multicollinearity and comprehensiveness.Then I have done the empirical analysis by establishing econometric models.The results of the analysis show that the non-state owned economy of the fixed assets investment has the most significant influence on the employment elasticity followed by the price of the capital factor and the per capita income level.Employment elasticity changes in the opposite direction with the price of labor.As labor costs rise the employment reduces and capital labor substitution occurs.The regression coefficient of technological progress and investment in fixed assets does not pass the test,probably because they have increasing and decreasing effect of two opposite effects on the employment,which does not mean it has no effect on employment elasticity effect.Actually it has different effect in different time,and in order to improve the employment elasticity the two factors could not be neglected.In addition,the regression coefficients of the industrial structure do not pass the test,but through the regression analysis of different industries employment elasticity of the third industry is much larger than the first and secondary industries.Therefore vigorously developing the service and high-tech industry is also an important factor in stimulating employment and improving employment elasticity.On the basis of the above research,in order to improve the employment elasticity and alleviate the employment pressure,we put forward some suggestions:promoting economic development and ensuring full employment;taping resource potential and achieving coordination and interaction of resources;optimizing the investment structure and promoting investment diversification;promoting industrial restructuring and paying attention to the development of tertiary industry;promoting scientific and technological innovation and transformation of economic development;lastly but most importantly deepening economic reform to offer an institutional guarantee for increasing employment.