Services Trade and Labor-Demand Elasticities of Service Sector: Empirical Evidence from China

Hao Wei, Qiang Fu, Sui Yang

School of Economics and Business Administration, Beijing Normal University, Beijing, China.

DOI: 10.4236/ajibm.2012.24018                

Abstract

This paper analyses the impact of services trade on the labor-demand elasticities of service sector with the data of China from 1982 to 2009.we find that: 1) First, no matter in the long run or in the short term, China’s services export distinctly impacts on the labor-demand elasticities of service sector. In the long-term influence, the substitution effect is much more powerful than the output effect, however, as to the short period, the output effect is a little stronger than the substitution effect; 2) Second, in the long run, we cannot reject the hypothesis of no relationship between service import openness and the labor-demand elasticities of service sector. Whereas, studying the result of the short term, trade liberalization of services import does affect the service sector labor-demand elasticity weakly.

Keywords

Trade Liberalization; Labor-Demand Elasticities; Service Sector; Substitution Effect; Output Effect

Conflicts of Interest

The authors declare no conflicts of interest.

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