The Impact Of Chinese Defense Spending On Employment

According to the budget released by the ministry of finance in 2019,China's defense budget expenditure in 2019 increased by 7.5% year on year compared with last year,reaching 1.19 trillion CNY.The growth rate of defense expenditure has exceeded the GDP target growth rate of the same year,which is enough to show that national defense security plays an extremely important strategic role in China.At present,in the goal of "six stability" for social development put forward by China,it is clearly pointed out that "stable employment" is the primary task,which indicates that the government attaches great importance to social employment and also reflects the grim employment situation in China in recent years.At present,many scholars in the field of economics and politics are interested in the relationship between military expenditure and economy,and the relationship between employment and economic growth is one of the important theoretical research topics of various economic schools.Under the background of the continuous expansion of global defense expenditure and the gradual emergence of social employment problems,a systematic analysis of the relationship between military expenditure and employment by using of economic theories and scientific measurement models will provide some suggestions for China to formulate national defense policies and stabilize employment policies.For this reason,this study by using the theory of new economic growth theory,Keynes employment,Okun's law,shed light on the problem of defense spending and employment.Using the CES production function of new economic growth theory as the foundation of model,combing defense spending,GDP,expenditure on education and employment,wages,policy factors of logical relationship,choose 1952-2018 China's defense spending and employment data regression estimate,and use a variety of measurement methods to test the applicability and robustness of the model.Based on the empirical results,this study have the following main conclusions: China's defense spending and employment there is a long-term co-integration relationship,in the long run,China's defense spending on employment levels have negative effects,which confirmed the defense spending "inhibition effect" is slightly bigger than the "promoting effect",the results of increased military spending in the budget for the size of the civilian sector investment is reduced,which have negative effect on employment.According to the results of the corrected error model,the effect of China's defense expenditure on the employment level in the short term is hysteresis,and the hysteresis effect is the same as the long-term effect.This shows that although China's military technology continues to break through the difficulties,in the process of transferring national defense technology to the civil sector,it still faces great obstacles and cannot effectively promote the increase of employment.In other influencing factors of the empirical analysis,GDP and social average wage effect on employment is significant.The specific point of view,fallen in the social average wages will make the increase of social employment,this result is consistent with reality,when the social average wages have fallen,enterprise labor costs will be less,thereby operating profit increase,increasing the demand for raw materials so as to drive the enterprise to expand the production scale,in the short term only by providing more jobs for expanded reproduction.For GDP,economic growth will lead to an increase in employment.When GDP growth rate increases by 2%,social employment will increase by 1%,and the ratio of the two is close to 2:1.The empirical results are exactly in line with the assumption of "Okun's Law".At the same time,the Reform and Opening Up to China's employment has played a positive role,and the effect is very significant,but the military reform on social employment is not significant.Through the robustness test,the empirical results show that the "inhibition effect" of defense expenditure has a greater impact on the employment of the agricultural population than that of the urban population,and has a more significant impact on the employment of the rural population.Defense expenditure will affect the primary industry,secondary industry and tertiary industry to different degrees.Specifically,the impact of defense expenditure on the primary industry(agriculture)is the smallest among the tertiary industries,while the negative impact on the secondary and tertiary industries is more significant.According to the above conclusions,this study draws four policy implications: adjusting the structure of defense expenditure appropriately,increasing the investment in infrastructure and military human capital;optimizing the structure of weapons and equipment system and reducing the "inhibition effect" of military expenditure;increasing the export of weapons and equipment to increase the fiscal self-sufficiency of the defense sector;removing barriers to technology transfer from military to civilian use and increasing the spillover effect of defense spending.