The Impact Of Vertical Specialization On China’s Labor Market

The inter-country trade is dominated by vertical specialization now,and the impact of trade on the labor market has always been a great concern in international economics.As the largest developing country,China participates in vertical specialization with abundant labor factors.At the same time,the domestic labor force is undergoing interindustry and inter-regional movements,and the domestic income gap has continued to increase.Does vertical specialization really affect the changes in China’s labor market? From the perspectives of employment scale,employment structure,and wage gap,this article makes a theoretical and empirical analysis of the impact of vertical specialization on China’s labor market.This article expands the H-O model and the Feenstra model respectively,combines the smooth adjustment hypothesis to analyze the impact of vertical specialization on China’s labor market at theoretical level,and then makes full use of the data from the world input-output database and China’s yearbooks The results of theoretical analysis are empirically tested using the systematic GMM method and simultaneous equations.In the regression analysis,in order to investigate whether the vertical specialization between China and countries with different economic levels has different effects on China’s labor market,the effects of vertical specialization of China’s exports to the world will be compared with those of China’s exports to developed countries and those of China’s export to developing countries.The main conclusions of this paper are: the effect of vertical specialization on employment scale includes scale effect,factor substitution effect,and technology effect.For different samples,the balance between the mechanisms leads to different synthetic effects.The synthetic effect of vertical specialization on the employment scale of the industries is positive,and the force of capital and technology is stronger after the financial crisis.The synthetic effect of vertical specialization on the employment scale of the service industries is negative,and the impact is less than that of industries.For both industries and service industries,the vertical specialization of China’s export to developed countries will promote employment,while vertical specialization of export to developing countries will inhibit employment.High capital intensity of the industries will weaken the effect of vertical specialization,while the capital intensity of service industries has weak influence on vertical specialization’s effects.Different changes in employment scale lead to changes in employment structure across industries.In addition,vertical specialization in the industrial sector will increase the relative demand and relative wages for skilled labor.The vertical specialization of China’s export to developed countries takes the lead.The effect of vertical specialization has weakened after the financial crisis.High capital intensity will inhibit the effect of vertical specialization on the relative demand and wages of skilled labor.