The Real Exchange Rate and Employment in China
We examine the impact of real exchange rate fluctuations on sectoral and regional employment in China from 1980 to 2008. In contrast to theoretical predictions, employment in both the tradable and non-tradable sectors contracts following a real appreciation. Our results are robust across different sub-samples, levels of sectoral disaggregation, and are more pronounced for regions with higher export exposure. We attribute our findings to the importance of services as intermediate input in exportable production. We test this channel of exchange rate transmission using regional input-output tables linked with employment data at the region-sector level. The results of this paper have important implications for China's labor market adjustment should the Chinese RMB strengthen in the future. To mitigate the costs of short-run labor market adjustment, appropriate demand management and structural reforms in the non-traded sectors should play an important role.
|Date of creation:||01 Jun 2011|
|Date of revision:|
|Contact details of provider:|| Postal: International Monetary Fund, Washington, DC USA|
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
|Order Information:||Web: http://www.imf.org/external/pubs/pubs/ord_info.htm|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Moser, Christoph & Urban, Dieter & di Mauro, Beatrice Weder, 2010.
"International competitiveness, job creation and job destruction--An establishment-level study of German job flows,"
Journal of International Economics,
Elsevier, vol. 80(2), pages 302-317, March.
- Moser, Christoph & Urban, Dieter M & Weder di Mauro, Beatrice, 2008. "International Competitiveness, Job Creation and Job Destruction - An Establishment Level Study of German Job Flows," CEPR Discussion Papers 6745, C.E.P.R. Discussion Papers.
- Pierre-Olivier Gourinchas, 1998.
"Exchange Rates and Jobs: What Do We Learn from Job Flows?,"
NBER Working Papers
6864, National Bureau of Economic Research, Inc.
- Pierre-Olivier Gourinchas, 1999. "Exchange Rates and Jobs: What Do We Learn from Job Flows?," NBER Chapters, in: NBER Macroeconomics Annual 1998, volume 13, pages 153-222 National Bureau of Economic Research, Inc.
- Linda Goldberg & Joseph Tracy, 1999.
"Exchange Rates and Local Labor Markets,"
NBER Working Papers
6985, National Bureau of Economic Research, Inc.
- Nucci, Francesco & Pozzolo, Alberto Franco, 2010.
"The exchange rate, employment and hours: What firm-level data say,"
Journal of International Economics,
Elsevier, vol. 82(2), pages 112-123, November.
- Francesco Nucci & Alberto Franco Pozzolo, . "The Exchange Rate, Employment and Hours: What Firm-Level Data Say," Working Papers 9, Department of the Treasury, Ministry of the Economy and of Finance.
- Burgess, Simon M & Knetter, Michael M, 1998.
"An International Comparison of Employment Adjustment to Exchange Rate Fluctuations,"
Review of International Economics,
Wiley Blackwell, vol. 6(1), pages 151-63, February.
- Simon Burgess & Michael M. Knetter, 1996. "An International Comparison of Employment Adjustment to Exchange Rate Fluctuations," NBER Working Papers 5861, National Bureau of Economic Research, Inc.
- Tamim Bayoumi & Jaewoo Lee & Sarma Jayanthi, 2006.
"New Rates from New Weights,"
IMF Staff Papers,
Palgrave Macmillan, vol. 53(2), pages 4.
- Westerlund, Joakim, 2005.
"Testing for Error Correction in Panel Data,"
2005:11, Lund University, Department of Economics.
- Hua, Ping, 2007. "Real exchange rate and manufacturing employment in China," China Economic Review, Elsevier, vol. 18(3), pages 335-353.
- Jose Manuel Campa & Linda S. Goldberg, 2001.
"Employment Versus Wage Adjustment And The U.S. Dollar,"
The Review of Economics and Statistics,
MIT Press, vol. 83(3), pages 477-489, August.
- José Manuel Campa & Linda S. Goldberg, 1999. "Employment versus Wage Adjustment and the U.S. Dollar," Working Papers 99-07, New York University, Leonard N. Stern School of Business, Department of Economics.
- Jose Manuel Campa & Linda S. Goldberg, 1998. "Employment versus wage adjustment and the U.S. dollar," Staff Reports 56, Federal Reserve Bank of New York.
- Jose Manuel Campa & Linda S. Goldberg, 1998. "Employment versus Wage Adjustment and the US Dollar," NBER Working Papers 6749, National Bureau of Economic Research, Inc.
- Ronald Ian McKinnon & Gunther Schnabl, 2008.
"China’s Exchange Rate Impasse and the Weak U.S. Dollar,"
CESifo Working Paper Series
2386, CESifo Group Munich.
- McKinnon, Ronald & Schnabl, Gunther, 2008. "China's exchange rate impasse and the weak U.S. dollar," Working Papers 73, University of Leipzig, Faculty of Economics and Management Science.
- Blundell, Richard & Bond, Stephen, 1998.
"Initial conditions and moment restrictions in dynamic panel data models,"
Journal of Econometrics,
Elsevier, vol. 87(1), pages 115-143, August.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Ana L. Revenga, 1992. "Exporting Jobs?The Impact of Import Competition on Employment and Wages in U. S. Manufacturing," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 255-284.
- Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
- Joseph Tracy & Linda Goldberg & Stephanie Aaronson, 1999. "Exchange Rates and Employment Instability: Evidence from Matched CPS Data," American Economic Review, American Economic Association, vol. 89(2), pages 204-210, May.
- Joshua Aizenman & Jaewoo Lee, 2008. "The Real Exchange Rate, Mercantilism and the Learning by Doing Externality," NBER Working Papers 13853, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:11/148. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow)or (Hassan Zaidi)
If references are entirely missing, you can add them using this form.