ME  Vol.3 No.1 , January 2012
The Effect of Processing Trade on Employment: in Case of China
Abstract: In this paper, we use panel data from 2002 to 2008 on China’s 31 provinces to analyze the effect of processing trade on regional employment. The results give evidence that processing trade has a significant and positive skill-bias effect on regional employment. Hereinto, processing import, including PIM and PSM import, especially the capital goods import by processing trade, is the root of the skill-bias effect of processing trade on employment. Net processing export is a driving to expand employment, including the skilled and the unskilled. But only PIM contributes to it.
Cite this paper: Y. Chen, "The Effect of Processing Trade on Employment: in Case of China," Modern Economy, Vol. 3 No. 1, 2012, pp. 61-67. doi: 10.4236/me.2012.31009.

[1]   R. C. Feenstra and G. H. Hanson, “Globalization, Out- sourcing, and Wage Inequality,” American Economic Re- view, Vol. 86, No. 2, 1996, pp. 240-245.

[2]   L. S. Ho, X. D. Wei and W. C. Wong, “The Effect of Outward Processing Trade on Wage Inequality: The Hong Kong Case,” Journal of International Economics, Vol. 67, No. 1, 2005, pp. 241-257. doi:10.1016/j.jinteco.2004.09.005

[3]   M. S. Leclair, “Export Composition and Manufacturing Employment in the US during the Economic Downturn of 1991-92,” Economic Systems Research, Vol. 14, No. 2, 2002, pp. 147-156. doi:10.1080/09535310220140942

[4]   P. Ruiz-Nápoles, “Exports, Growth, and Employment in Mexico, 1978-2000,” Journal of Post Keynesian Economics Vol. 27, No. 1, 2004, pp. 105-124.

[5]   X. Fu and V. N. Balasubramanyam, “Export, Foreign Direct Investment and Employment: The Case of China,” World Economy, Vol. 28, No. 4, 2005, pp. 607-625. doi:10.1111/j.1467-9701.2005.00694.x

[6]   R. C. Feenstra and C. Hong, “China’s Exports and Employment,” In: China’s Growing Role in World Trade, NBER Working Paper No. 13552, Cambridge, 2010, pp. 167-199.

[7]   R. M. Leichenko and N. E. Coulson, “Foreign Industrial Exports and State Manufacturing Performance,” Growth and Change Vol. 30, No. 4, 1999, pp. 479-506. doi:10.1111/j.1468-2257.1999.tb00042.x

[8]   R. M. Leichenko, “Exports, Employment, and Production: a Causal Assessment of U.S. States and Regions,” Economic Geography, Vol. 76, No. 4, 2000, pp. 303-325. doi:10.2307/144389

[9]   R. Koopman, Z. Wang and S. J. Wei, “How Much of Chinese Exports Is Really Made in China? Assessing Domestic Value-Added When Processing Trade Is Pervasive,” NBER Working Paper 14109, Cambridge, 2008.

[10]   A. Conte and M. Vivarelli, “Globalization and Employment: Imported Skill Biased Technological Change in Developing Countries,” Jena Economic Research Papers 2007-009, Jena, 2007.

[11]   A. Mitra, “Technology Import and Industrial Employment: Evidence from Developing Countries,” Labour, Vol. 23, No. 4, 2009, pp. 697-718. doi:10.1111/j.1467-9914.2009.00461.x

[12]   X. Fu and V. N. Balasubramanyam, “Township and Village Enterprises in China,” Journal of Development Studies Vol.39, No. 4, 2003, pp. 37-46. doi:10.1080/713869424

[13]   S. Y. Tong and Y. Zheng, “China’s Trade Acceleration and the Deepening of an East Asian Regional Production Network,” China and World Economy, Vol. 16, No. 1, 2008, pp. 66-81. doi:10.1111/j.1749-124X.2008.00100.x

[14]   S. Lall and M. Albaladejo, “China’s Competitive Performance: A Threat to East Asian Manufactured Exports?” World Development, Vol. 32, No. 9, 2004, pp. 1441-1466.