Manufacturing Growth and Local Multipliers in China

Type Working Paper
Title Manufacturing Growth and Local Multipliers in China
Author(s)
Publication (Day/Month/Year) 2015
URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2697580
Abstract
In this paper, I study the impact of employment growth in manufacturing on employment in the non-tradable sector for prefecture-level cities in China. Using the 2000 and 2010 Censuses of Population, I apply the shift-share approach to isolate the exogenous change of employment growth in manufacturing and investigate its impact on the non-tradable sector. I find that adding ten manufacturing jobs creates 3.4 additional jobs in the non-tradable sector. I also show that the effect is heterogeneous along a number of dimensions. More specifically, one new job in high-technology manufacturing creates more jobs in the non-tradable sector while low-technology manufacturing employment growth has no significant multiplier effect. Among the non-tradable industries, the multiplier is the largest for wholesale, retail, and catering. Finally as far as geographical heterogeneity is concerned, I find that the multiplier is greater for inland cities.

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