A Study On The Impact Of City Size On Employment In Producer Services

With the increasing demand accumulated by accelerating transformation of industries,producer services have been extending their ranges and increasing their values.Producer services can not only provide intermediates for production plants with good quality,but can also promote the innovation of industrial sectors.Labors entering into the producer service industries extend broader range of producer services,and also play a significant role in maintaining stable employment of China.Meanwhile,cities are crucial bases for human activities to take place,whose various functions and roles affect the advancement of producer services.With the size of cities expanding,changes in industry layouts and their functions deeply influence the development and employment of producer service industries.Therefore,learning about how employment absorption ability of the producer service industries could be affected by urban scales is of great significance,and guidance could be provided for the orderly development of producer services industries and more sufficient labor employment in various cities.This paper focuses on the influence of urban scales on producer service employment.First,a fixed-effect model with data of 250 cities in the period 2005-2016 is utilized for empirical analysis.To further guarantee that the regression results are stable,cities are divided to the eastern and middle,western and northeastern part to see whether the influence of urban scales on producer service employment varies with regions.In addition,the built-up areas of municipal districts are used as the representative variables of urban scales,so that this paper could judge if the regression results remain stable with the changed measurement of urban scale.Moreover,in order to solve the potential endogeneity problem,panel instrumental variable method and the dynamic panel model are respectively utilized for estimation.Next,this paper has a deep insight into the high-level and low-level branches of the producer service industry to observe if urban scales have different impact on the employment of various branches.Finally,the mediator effect of manufacturing advancement and the labor market are tested to see whether these two mediator variables function in the influence of urban scales on the employment of producer service industries.Based on the analysis,this paper draws several conclusions.First,urban scales indeed have a positive U-type impact on producer service employment.That is,with the enlargement of urban scales,the ratio of producer service employment to total employment decreases firstly and then rebounds.The empirical result shows that the coefficients of urban scales and their square are respectively negative and positive,which are both significant at 1%.The turning point of urban scales is at 8,611.1 thousand people.Secondly,the positive U-type impact on producer service employment maintains in both eastern China and middle part,and the western and northeastern part.However,the turning point of the U-type impact in the eastern and middle part of China requires more population than that in the western and northeastern part.Before and after considering the effect brought by the province-level municipalities,the turning point in the eastern China locate at respectively 6,666.7 thousand and 5,985.9 thousand people,while in the middle and western part at respectively 2,709.4 thousand and 3,024.6 thousand people.Thirdly,the high-level and low-level producer service industries are differently affected by urban scales.Even though these two types of producer service industries are both affected by urban scales with a positive U-type impact,the turning point of urban scales for high-level producer service industries is significantly smaller than that for low-level producer services.In addition,industry structure,official governance,physical capital and labor capital all exert a significant positive impact on the employment of high-level producer service industries,while these factors have no effect on the employment of low-level producer services.Fourthly,the mediation effect of manufacturing advancement exists.The theoretical analysis presents that the development of manufacturing industries benefits from agglomeration,and the adjustment of demand and characteristics of manufacturing industries affects the contribution of producer services in employment.The empirical result shows that the urban scales have a negative U-type impact on the proportion of manufacturing industry in the whole nation,and this impact is passed on to producer service employment.Meanwhile,advancement of manufacturing industry also has a direct positive influence on producer service employment.Fifthly,the mediation effect of labor market exists.The theoretical analysis presents that the numbers and quality of labors change with the expansion of urban scales,which leads to variations in the supply side and demand side.In addition,the sticky wages make a difference to the variations,in this case,producer service employment is differently affected.The empirical result shows that urban scale has a positive U-type impact on the labor market employment,and the impact is transmitted to producer service employment.At the same time,labor market employment also has direct positive influence on producer service employment.According to the conclusions,this paper offers several suggestions.First,middle-sized cities and small cities should help change the negative effect of urban scales on producer service employment,while megalopolis and super metropolis should make efforts to utilize the positive impact of urban scales on producer service employment.Second,different parts of China should support the employment of producer service with considerations of local industries and economic development,and measures and policies adaptive to regional conditions shall be adopted to promote better employment absorption ability of producer services.Third,more importance should be attached on the differences in the high-level and low-level producer service industries.The employment of low-level producer service industries should be supported to be stable,while better surroundings and more sufficient elements shall be provided for the advancement of high-level producer service industries.In this case,these two branches could coordinate to make better achievements.Fourth,it is important to facilitate the coordination between producer service industries and the secondary industries,and guide the producer service industries to respond actively to demand variations of secondary industries as well as make best of local resources and improve themselves.Finally,better surroundings for producer service employment shall be created,and human capital should be utilized to enhance employment of producer service industries.As for the supply side,the cognitive barriers should be surmounted and the talent of labors should be cultivated with the help of governmental agencies,while as for the demand side,producer services should be encouraged to discover their potential demand,and bring more opportunities for the market.