The Study On The Impact Of Foreign Direct Investment On The Scale Of Informal Employment In China ——An Empirical Analysis Based On Provincial Panel Data

To govern a nation,it is necessary to benefit the citizens.In China,"protecting people’s livelihood and stabilizing employment" has always been the focus of the government’s work,but the reality is that China is facing a serious employment problems.The 2021 government work report points out that China has 10 million size of college students are waiting for employment in 2021 only,and there is also the employment demand of workers changing jobs brought by industrial upgrading.Data from the China Statistical Yearbook shows that the scale of informal employment in China has exceeded 50%,making it the main employment situation in the country.Flexible employment and other forms of informal employment have become an important measure to solve the employment problem in China.Therefore,it is of great significance to study how to expand the scale of informal employment.Since the reform and opening up,in the context of growing global economy and financial integration,attracting foreign investment is still one of the important measures for countries to promote economic development and stabilize employment,and China has become the most attractive country for investment in the world.The international economics community generally agrees that the employment impact of FDI in host countries varies slightly in the short run,but in the long run FDI has a positive impact on the employment scale of a country.On the other hand,the increase of FDI also promotes the economic and social development and employment.Based on the analysis of FDI and informal employment in China,it is important to investigate whether FDI has an impact on informal employment in China,and if so,to what extent.In order to study in depth the impact of foreign enterprises’ investment in China on informal employment in China,this essay is conducted on the basis of panel data of thirty-one provincial administrative regions from 2007 to 2019 and selects control variables such as GDP,tax burden,unemployment rate and local fiscal revenue,and constructs a fixed-effects model for empirical analysis with reference to previous research results to investigate empirically whether FDI has a The empirical study investigates whether FDI has a significant effect on the number of informal employment and if so,the extent of the effect.First,the regression results of FDI and informal employment show that an increase in FDI will have a significant positive effect on the size of informal employment,and a 1%increase in FDI will cause a 0.12%increase in informal employment.Meanwhile,considering the obvious regional and temporal characteristics of FDI in China,there is a large gap between the amount of foreign capital utilized in coastal provinces and inland provinces,and the efficiency of foreign capital utilized in China turned from rapidly rising to stabilizing around 2013.In this paper,thirty-one provincial administrative regions are divided into coastal and inland areas as well as the national 2013 as the time cut-off point as four sub-samples,and empirical analysis is conducted to compare the impact of FDI on informal employment in different regions and different periods.The results show that the significant positive effect of FDI is greater for coastal regions than for inland regions,and the positive effect is greater before 2013 than after 2013.Finally,the model is estimated using both differential GMM and systematic GMM methods,and the empirical results prove that the model passes the test with good explanatory power.In order to achieve the benign development of FDI for informal employment in China,this essay puts forward the following policy recommendations.First,continuously promote the development of FDI investment industries to high-tech industries and service industries,improve relevant policies and laws to appropriately relax the entry threshold,and introduce high-quality industries to drive the expansion of informal employment scale.Second,inland regions should take over some industries in coastal regions that gradually lose their advantages,expand the scale of informal employment in inland regions,extend the life cycle of industries,and narrow the gap between coastal and inland regions.Third,prevent the risks brought by international markets to China’s economy and improve the efficiency of FDI capital use.Fourth,pay attention to the skills training of informal employment,improve the labor quality of employed people,enhance employment skills to improve the efficiency of FDI utilization and the goal of expanding the scale of informal employment.