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The Real Exchange Rate and Employment in China, Mai Dao, Ruo Chen

Label
The Real Exchange Rate and Employment in China, Mai Dao, Ruo Chen
Language
eng
Abstract
We examine the impact of real exchange rate fluctuations on sectoral and regional employment in China from 1980 to 2008. In contrast to theoretical predictions, employment in both the tradable and non-tradable sectors contracts following a real appreciation. Our results are robust across different sub-samples, levels of sectoral disaggregation, and are more pronounced for regions with higher export exposure. We attribute our findings to the importance of services as intermediate input in exportable production. We test this channel of exchange rate transmission using regional input-output tables linked with employment data at the region-sector level. The results of this paper have important implications for China's labor market adjustment should the Chinese RMB strengthen in the future. To mitigate the costs of short-run labor market adjustment, appropriate demand management and structural reforms in the non-traded sectors should play an important role
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Includes bibliographical references
resource.governmentPublication
international or intergovernmental publication
Literary Form
non fiction
Main title
The Real Exchange Rate and Employment in China
Nature of contents
dictionaries
Responsibility statement
Mai Dao, Ruo Chen
Series statement
IMF Working Papers
Table Of Contents
Cover; Contents; I. Introduction; II. Theory; III. Data; A. The Real Effective Exchange Rate; B. Sectoral Data; C. Regional Data; D. Input-Output Tables and Regional Sector Data; IV. Empirical Analysis; A. Analysis with Sectoral Data; B. Analysis with Regional Data; V. Transmission Channels; A. Sectoral Input-Output Pattern in China; B. Empirical Test of Sectoral Dependence; VI. Conclusion; References; Appendix; Tables; Table 1. Chinese industry and sector classification; Table 2. Regional summary statistics; Table 3. Cross-sector panel regression for employment growth: 1980-2002, 16 sectorsTable 4. Cross-sector panel regression for employment growth: 1990-2008, 8 sectorsTable 5. Regional panel regression by industry with OLS: 1988-2008; Table 6. Regional panel regression by industry with OLS: 1994-2008; Table 7. Regional panel regression by industry using 2SLS: 1994-2008; Table 8. SUR results for employment growth rates I; Table 9. SUR results for employment growth rates II; Table 10. SUR results for employment growth rates III; Table 11. SUR results for employment growth rates IV; Table 12. Results with regional I-O tables and sectoral employment, contemporaneous regressorsTable 13. Results with regional I-O tables and sectoral employment, lagged regressorsTable 14. National intermediate input usage in tradable sectors; Table 15. Intermediate input usage in tradables by region in 2002; Table 16. Regional distribution of nontradable intermediate input shares in tradable sectors; Figures; Figure 1. Logarithm of real effective exchange rate; Figure 2. Logarithms of real effective exchange rate and average USD/RMB rate; Figure 3. Sectoral employment and the real exchange rate; Figure 4. Sectoral employees (urban units) and the real exchange rateFigure 5. China Regional MapFigure 6. Employment growth in secondary and tertiary industry for selected regions; Figure 7. Intermediate input to tradables of the wholesale and retail sector vs. regional openness
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