Does Labor Market Distortion Restrain FDI Flow To Service?

With the further development of economic globalization,the amount of FDI actually used in China keeps increasing,especially in the service sector.Which makes more and more domestic scholars focus on the influencing factors of FDI flows to services,throughliterature review can be found in the system,the existing academic research temporarily rarely to dig deeper into the Labour market distortion for FDI flows to the profound influence of the service industry,but in our country,the supply side to further advance the process of structural reform,distorted the Labour market has become the important factors influencing the FDI flow to the services.Therefore,industry research is different from most previous scholars,this article takes our country 30 provinces,municipalities and autonomous regions(except Hong Kong,Macao and Taiwan regions and the Tibetan)based on the panel data of additional analyzed the regional differences,the effects of labor market distortions on FDI flow to the services,to widen the research Angle of view,in the field of FDI has strong theoretical significance to deepen of existing research results,different areas to relieve labor market distortions,and promote the rational flow of FDI has important practical significance.Based on labor market segmentation theory,labor market discrimination theory and comparative advantage theory,this paper adopts literature sorting method,statistical analysis method,model analysis method and comparative reference method to study the impact of China’s labor market distortion on FDI flow to the service industry.Firstly,this paper explores the influence mechanism of labor market distortion on FDI flow into service industry from the perspectives of supply mechanism and competition mechanism,and puts forward the hypothesis that labor market distortion will inhibit FDI flow into service industry.Secondly,this paper studies the degree of labor market distortion in China from 2010 to 2016 and the current situation of FDI flowing into the service industry.It finds that although the overall degree of labor market distortion in China is becoming less and less,the labor market distortion still exists and the labor market in different provinces presents a situation of positive and negative distortions in different directions.At the same time,the actual use of FDI in China’s service industry has shown a steady rise overall,but there is still a large gap between the central and western regions and the eastern regions.Thirdly,this paper uses the C-D production function to calculate the degree of labor market distortion in 30 provinces,municipalities and autonomous regions(except Hong Kong,Macao,Taiwan and Xizang)from 2010 to 2016,and carries out an empirical study with the panel data regression model The results show that for every unit increase in China’s labor market distortion,the amount of FDI flowing into the service industry will decrease by 0.3719 units,proving that the labor market distortion indeed inhibits FDI flowing into the service industry.From the point of regional difference analysis results,the eastern region every increase 1 unit of labor market distortions,the amount of FDI flow to the services sector will reduce 0.7783 units,but the middle region and west region regression result of labor market distortions is not significant,shows that the main factors influencing the FDI flow to the service sector is in the east of the labor market distortions,due to the water in the central and western regions are mostly labor force,compared with the eastern region labor market distortion to a lesser degree,the amount of FDI flow to the service sector is smaller.Finally,combined with the empirical results and analysis,this paper proposes the following countermeasures:first,increase the transfer of domestic service industry and promote the coordinated development of regional service industry;Second,expand the level of service industry opening to the outside world,promote the rational flow of FDI;Third,to promote the rational flow of labor between regions,providing FDI with talent "incentives".