The Impact Of Infrastructure On Employment In Chinese Cities

According to the theory of labor market,the equilibrium employment level is determined by both labor demand and labor supply.The infrastructure can affect both sides thereby affect the level of employment.We study the employment effect of infrastructure theoretically and empirically.In the theoretical part,we did an analysis of the impacts of infrastructure on employment from micro and macro perspective,the short-term and long-term perspective,the labor demand and labor supply perspective,respectively.In the empirical part,we use data for 283 cities of China from 2004 to 2013 to investigate the effect of transportation,energy and greening infrastructure.We use clustered standard error estimate method to estimate a static panel data model and system generalized moment estimation method to estimate a dynamic panel model,the latter improved the accuracy of the estimate.The empirical results show that transportation,energy and greening infrastructure indeed promote employment in cities.Overall,in short run,the employment effect of the energy infrastructure is the largest,followed by transportation infrastructure,while greening infrastructure plays a relatively small role on employment.In addition,we calculated the long-term employment elasticities of three kinds of infrastructure and we found that the long-term employment elasticity of energy is pretty small.What’s more,we did a classified research on cities with different levels of economic development.We found that for first-tier-cities and second-tier cities,the employment effect of energy infrastructure and greening infrastructure is negative in short-run.For cities which relatively underdeveloped,the overall employment effects of transportation and energy infrastructures are relatively weak.Based on the above conclusions,we propose the following policy implications:1.In consideration of the fact that transportation,energy and greening have a positive employment effect,the governments should make great efforts to strengthen infrastructure construction.In the past,greening infrastructure has not received enough attention,but the empirical results show that greening infrastructure also play an important role in promoting employment.Therefore,policy makers must pay attention to greening construction.2.As China is in the stage of economic restructuring,which means a shift from secondary industry to tertiary industry,we must vigorously develop the tertiary industry.As the energy infrastructure has the largest impact on the employment of the service industry,the government should strengthen energy infrastructure construction.More importantly,the efficiency of energy use should be improved.3.For first-tier-cities and second-tier cities,energy and greening have reached saturation levels,so the concerns could be move to other types of infrastructure investment.4.There is a big gap of infrastructure level between different cities in China.The government should make great efforts to bridge the gap between cities.