Employment Effects of Growth Rebalancing in China

17 Pages Posted: 19 Aug 2009

See all articles by Kai Guo

Kai Guo

International Monetary Fund (IMF)

Papa N'Diaye

International Monetary Fund (IMF) - Asia and Pacific Department

Multiple version iconThere are 2 versions of this paper

Date Written: August 2009

Abstract

This paper gauges the potential effects on employment of rebalancing China's exportoriented growth model toward domestic demand, particularly private consumption. Shifting to a private consumption-led growth likely means more demand for existing and new services as well as reorienting the production of tradable goods toward domestic markets. In China's case, this would also imply moving a large number of less skilled labor from the tradable sector to the nontradable sector. The paper shows that while rebalancing China's growth toward a domestic-demand-led economy would likely raise aggregate employment and employment opportunities in the longer term, there could be employment losses in the short run as the economy moves away from the tradable sector toward the nontradable sector. Mitigating these costs will require active labor market policies to cushion the employment impact in the transition, particularly in meeting the skills gap of associated with this transition.

Keywords: Agricultural sector, China, People's Republic of, Cross country analysis, Demand, Economic growth, Economic models, Employment, Labor market policy, Manufacturing sector, Private consumption, Services sector

Suggested Citation

Guo, Kai and N'Diaye, Papa, Employment Effects of Growth Rebalancing in China (August 2009). IMF Working Paper No. 09/169, Available at SSRN: https://ssrn.com/abstract=1457592

Kai Guo

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Papa N'Diaye

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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