A Study Of The Impact Of Economic Policy Uncertainty On Labor Force Employment

The current global situation is tense and the world landscape is undergoing a major reshuffle,coupled with the spread of the new crown epidemic around the world and the uneven measures taken by countries to prevent the epidemic,which has brought a huge impact on commodities,food and raw materials,making macroeconomic uncertainty reach a record high.Uncertainty has impacted national production,employment,and price stability to varying degrees,making production,employment stabilization,and development the focus of current policy regulation.As the structural employment contradictions are highlighted,the structural unemployment problem also arises.As small and medium-sized enterprises are the carriers of the real economy and the main absorbers of employment,it is crucial to study the changes of labor force in enterprises under the uncertainty of economic policies to "stabilize employment".In this paper,we study the impact of economic policy uncertainty on labor force employment using micro-firm-level data from 2001 to 2020,with real options theory as the mainstay and economic cycle and risk appetite theory as supplements.The sample of non-financial listed companies is selected to cover various industries in a more comprehensive manner.The results of the empirical study show that economic policy uncertainty is negatively related to job creation and positively related to job destruction,which in turn damages net employment growth,as shown by the fact that every 1-unit change in economic policy uncertainty damages job creation by 0.0408 units and increases job destruction by 0.011 units,with a combined damage of 0.0518 units to net employment growth.Further analysis reveals that when economic policy uncertainty rises,reasonable government monetary policy regulation and stabilization of entrepreneurial expectations have a mitigating effect on this negative impact,with each unit increase in monetary policy intensity and entrepreneurial confidence weakening employment damage by 0.03898 and 0.0854 units,respectively,revealing that the government reasonably matches monetary policy instruments and stabilizes entrepreneurial business information to promote employment when employment is hit by uncertainty.This suggests that the government can promote employment by stabilizing entrepreneurs’ business information.At the same time,in order to investigate whether the degree of shock is consistent across industries,the study of the sample by industry reveals that there is firm heterogeneity in the negative impact of economic policy on employment changes,specifically,state-owned enterprises are more robust than non-state-owned enterprises,and the impact on secondary industries is greater than that on other industries,and the impact on manufacturing industries is greater than that on non-manufacturing industries.This paper provides a more comprehensive study of the relationship between economic policy uncertainty and labor force employment at the firm level,enriching the research on economic policy uncertainty and labor force employment.Finally,in response to the findings of this paper,it is suggested that the government should maintain a clear and transparent policy framework,publish policy information in a timely manner,pay attention to the international situation to make reasonable judgments to reduce economic policy uncertainty at source,and enterprises should establish a long-term strategic vision and entrepreneurial responsibility to enhance their ability to resist market disturbances.