Tariff Reduction,Labor Market Flexibility And Employment

China’s accession to the WTO’s commitment to reduce the tariff has been completed in 2010.Recent years,the overall level of tariffs in China remains 9.8% for a quarter of the world average tariff rate.it cannot be denied that tariff reduction will facilitate trade liberalization and trade facilitation.Trade liberalization will increase domestic competition.Some companies will expand their sizes,while some will downsize themselves or even withdraw from the market.As a consequence,labor resource is reallocated in various departments and industries.Research on trade liberalization and employment,recently,has become a serious topic,which definitely can contribute to formulating China’s trade policies and avoiding the risk of international competition,and can help to solve the major problem of employment relating to the people’s livelihood and social stability.Most of the existing literatures on trade liberalization and employment focuses on export trade,while ignoring the issue of import trade liberalization.Although some scholars have begun to pay attention to the impact of import trade liberalization on employment.But most of them use the indicators like import penetration,import trade and so on to measure the import trade liberalization.Due to different indicators and measurement methods,papers get different conclusions.Tariff is the most direct reflection of trade liberalization.But existing literatures select the most favored nation tariff rate,not taking into account the tariff concessions in the regional free trade zone.In view of this,this paper uses the MFN tariffs and the level of trade agreements tariffs to calculate the import tariffs respectively,and dynamic panel system GMM to test endogeneity.This paper is carried out according to putting forward questions,literature review,theoretical analysis,empirical analysis and problem-solving research.Therefore,the main structure organises as follows:The first part is an introduction.This section,firstly,briefly introduces employment situation.Based on the background of declining-tariff and increasing-unempolyment trend,this paper puts forward the research problem-the influence of labor market flexibility on the employment and tariff and this section explains significance of study on this theme.Secondly,this section introduces paper ideas,structure framework of this paper and methods of research.Finally,this section sums up the innovation and deficiency by comparison.The second part is the literature review.This section mainly reviews the related theory on the relationship of trade liberalization and employment as well as theinfluence of labor market flexibility on employment,clarifies the previous research methods and conclusions,and summarizes their reviews and identifies innovation.The third part is the theoretical analysis of the influence of labor market flexibility and tariff on employment,which are based on the following empirical analysis.The fourth part is empirical analysis.This section introduces regression designs including regression model,variable issues and data issues.And then this section conducts empirical research and system GMM analysis.And this paper empirically analyzes the impact of labor market flexibility and tariff on the employment based on China’s manufacturing panel data.The fifth part is the main conclusion and recommendations.This section mainly summarizes the results of the regression results and puts forward some policy suggestions on how to eliminate the negative impact of tariff reduction on employment based on the above conclusions.This paper analyzes the impact of tariff and labor market flexibility on employment.the regression results show,controlling other variables,that the tariff reduction will reduce the employment,and the specific effect depends on the flexibility degree of the labor market.When the labor market is not flexible enough,tariff concessions will have a significant negative impact on China’s manufacturing employment,while if the flexibility of the labor market is high,the flexible labor market can weaken the negative effects of tariff concessions on employment.By the way,total factor productivity will increase the employment,While increasing-wage will reduce employment.State-owned enterprises and foreign investment will reduce employment,but its impact is not significant,and R & D investment will significantly reduce the employment.Compared with the existing literature,this paper may have the following innovations: First,this paper uses the industry import tariffs,the true reflection of China’s tariff level,considering the MFN tariffs.Second,this paper takes the cross items of labor market flexibility and employment into the research model analyzes impact of labor market flexibility and tariff on employment.Third,the dynamic panel regression model is built and the GMM regression method is used to control the endogeneity of the model,which makes the model more robust and the regression result is more effective.