Employment Effects of Growth Rebalancing in China

International Monetary Fund Working Paper No. 09/169

17 Pages Posted: 24 Sep 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 1, 2009

Abstract

This paper gauges the potential effects on employment of rebalancing China's export-oriented 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 non-tradable 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 non-tradable 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: Employment, growth rebalancing, GIMF model

JEL Classification: E2, F47, J21, O4

Suggested Citation

Guo, Kai and N'Diaye, Papa, Employment Effects of Growth Rebalancing in China (August 1, 2009). International Monetary Fund Working Paper No. 09/169, Available at SSRN: https://ssrn.com/abstract=1478123 or http://dx.doi.org/10.2139/ssrn.1478123

Kai Guo

International Monetary Fund (IMF) ( email )

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

Papa N'Diaye (Contact Author)

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

700 19th Street NW
Washington, DC 20431
United States

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