The Impact Of Labor Mobility On The Comparative Advantage Of China's Manufacturing Industry

As a powerful country of labor market,China has achieved long-term and fast development in the past few years through its comparative advantage in labor cost and participation in international production division.However,under the pressure of the rising of Southeast Asian countries and continuously increasing wage level in domestic labor market,comparative advantage of China relying on low labor price seems unsustainable and weakens continuously.This shows in the decline of gross foreign trade volumes.In longterm,it is difficult for China to change this developing pattern in foreign trade.For manufacturers of China,especially labor-intensive manufacturers,labor market is vital for foreign trade.Therefore,it is important to find an approach to fully exploit labor market under present circumstances.For a long term,restricted by institutions(e.g.household registration system)that exist as obstacles of labor mobility,labor mobility of China is lower than developed countries.Labor mobility reflect the efficiency of the labor market,and it helps enhance production efficiency.Therefore,the major question to raise is that whether manufacturing sector be able to exploit the labor market if the labor mobility enhances.And whether differences in labor mobility among regions can affect foreign trade of volatile manufacturers in this region?Labor mobility can refer to mobility among industries,and among regions.This paper refers to labor mobility as mobility among regions.Changes in external economic environment,business circle,and accidental events can have impact on industries.Due to characteristics of different industries,this impact can cause different fluctuation levels.The major viewpoint of this paper is that regions with higher labor mobility can have stronger comparative advantage in volatile industries.The mechanism is that industries in higher labor mobility regions will have stronger ability to increase or decrease capacities,and lower price to adjust,then have stronger comparative advantage.To test this mechanism,this paper uses data of subdivision manufacturing industries from 2014 to 2016,and runs tests through one-way FEM.The results support the mechanism and reach conclusions as below:(1)Higher region labor mobility have positive influence on comparative advantage,and there exists difference in extent that the influence have;(2)Higher region labor mobility have negative influence on comparative advantage in high capital-intensity sectors;(3)For capital-intensive industries,comparative advantage is more sensitive to changes in labor mobility,and less sensitive to changes in natural resource endowments.These conclusions provide theoretical support for labor market reform of China.In the end of this paper,several proposals are listed to enhance comparative advantage through improvement of domestic labor mobility.