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


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.

Share and Cite:

H. Wei, Q. Fu and S. Yang, "Services Trade and Labor-Demand Elasticities of Service Sector: Empirical Evidence from China," American Journal of Industrial and Business Management, Vol. 2 No. 4, 2012, pp. 136-144. doi: 10.4236/ajibm.2012.24018.

Conflicts of Interest

The authors declare no conflicts of interest.


[1] D. S. Hamermesh, “Labor Demand,” Princeton University Press, Princeton, 1993.
[2] D. Rodrik, “Has Globalization Gone too Far?” Institute for International Economics, Washington DC, 1997.
[3] M. J. Slaughter, “International Trade and Labor Demand Elasticities,” Journal of International Economics, Vol. 54, No. 1, 2001, pp. 27-56. doi:10.1016/S0022-1996(00)00057-X
[4] R. Hasan, D. Mitra and K.V. Ramaswamy, “Trade Reforms, Labor Regulations and Labor Demand Elasticities: Empirical Evidence From India,” Working Paper 9879, NBER, 2003.
[5] I. Haouas and M. Yagoubi, “Trade Liberalization and Labor-Demand Elasticities: Empirical Evidence from Tunisia,” IZA Discussion Paper, No. 1084, 2004.
[6] P. Fajnzylber and W. F. Maloney, “Labor Demand and Trade Reform in Latin America,” Journal of International Economics, Vol. 66, No. 2, 2005, pp. 423-446. doi:10.1016/j.jinteco.2004.08.002
[7] S. Zhou, “Empirical Research on Trade Liberalization’s Impact on Industry Sector Labor-Demand Elasticities,” World Economy, Vol. 29, No. 2, 2006, pp. 31-40.
[8] D. Greenway, R. C. Hine and P. Wright, “An Empirical Assessment of the Impact of Trade on Employment in the United Kingdom,” European Journal of Political Economy, Vol. 15, No. 3, 1999, pp. 485-500. doi:10.1016/S0176-2680(99)00023-3

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.