Manufacturing Growth and Local Multipliers in China
50 Pages Posted: 7 Dec 2015 Last revised: 3 Jun 2017
Date Written: January 1, 2017
We investigate the impact of manufacturing employment growth on the non-tradable sector for prefecture-level cities in China. Using the 2000 and 2010 Censuses of Population, we apply the shift-share approach to isolate the exogenous change of employment growth in manufacturing. We find that adding ten manufacturing jobs creates 3.4 additional jobs in the non-tradable sector. We also show that the effect is heterogeneous along a number of dimensions. More specifically, new jobs in high-technology manufacturing is responsible for the entire effect with low-tech manufacturing showing no significant effect. Among the non-tradable industries, the effect is largest for wholesale, retail, and catering with no effects on utilities and construction. We find that the effect is also geographically heterogeneous, with the multiplier being greater for inland provinces.
Keywords: Structural transformation, Local labor markets, Regional spillovers, China
JEL Classification: O14, O1, R1, N95
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