DING Shouhai,etc:Can Service Industry Promote Chinas Employment Chronically?

Abstract  In recent years, there exist both economic callback and employment increase in China, and the service industry plays an important role. Through empirical analysis we prove that the service industry has a long-term mechanism to promote the employment growth. Firstly, based on the Baumol-Fuchs hypothesis test, we find that the income elasticity of demand of Chinese service industry exceeds 1, and Chinese service industry has great development potential due to its inadequate development. Secondly, based on the modified employment equation, we find that the elasticity of employment of service industry is far higher than that of the industrial sector, and service industry has stronger employment stickiness. Service industry can serve as the absorber and stabilizer of employment. Chinese current employment pressure mainly grows out of migrant workers and college graduates, and to solve the employment problem of the two groups, it is essential to promote both the development of traditional service industry and the upgrading of emerging service industry. At last, this paper proposes corresponding suggestions.

Key words： Employment of Service Industry      Baumol-Fuchs Hypothesis      Employment Elasticity

Source: Finance & Trade Economics , No.8, 2014