Page 85 - IJPS-10-2

International Journal of
Population Studies Employment-driving effect

In the past decades, China’s economic growth has mobility pattern among manufacturing, business services,
mainly relied on investment and exports, while the and knowledge-intensive business services, utilizing the
structural challenges of weak domestic demand growth whole population geocoding registration data of Swedish
and insufficient consumption have persisted. Since 2013, workers and their labor market changes from 2010 to 2014.
a noteworthy shift in the characteristics of economic The results highlight important two-way characteristics
growth has taken place, and the “new troika,” particularly in the labor mobility between manufacturing and service
the “Belt and Road” initiative, has played a pivotal role industries. In a study using American data, Moretti (2010)
in promoting the development of the service-oriented explores the leading role of manufacturing employment
economy. Consequently, this has led to the expansion of in producer services employment. The results reveal that
employment within the services industry. In the era of every new job in manufacturing can generate 1.59 jobs
global value chains, the separation of manufacturing from in producer services. However, the driving effect varies
service activities is increasingly challenging (Miroudot, among different manufacturing sectors, with the high-
2019). The interaction between manufacturing and services tech manufacturing sector exhibiting the largest impact,
industries, especially in knowledge-intensive services, approximately 1.57 times the average employment-
has not only become closer but also exhibits a trend of driving effect of the manufacturing sector. Moretti &
integration (Ciriaci & Palma, 2016; Castellani et al., 2016). Thulin (2013) further compare the employment-driving
It is well-documented that the service industry effect of manufacturing on producer services between
exerts a positive impact on manufacturing productivity. the United States (U.S.) and Sweden: For every new job
Consequently, when formulating industrial policies, the in manufacturing, producer services increase by 0.49 jobs
government should thoroughly consider the interaction in Sweden, indicating a considerably lower employment-
between manufacturing and service industries (Berardino driving effect compared to the U.S. Numerous scholarly
& Onesti, 2018). In the course of China’s industrialization studies consistently demonstrate that in developed
process, the integration of manufacturing and service economies almost everywhere, employment growth in the
industries helped the nation’s economy break through service sector is often accompanied by a contraction in
the development dilemma and achieve transformational the manufacturing sector, both in absolute terms and as
development (Berardino & Onesti, 2020). Employment a share of total employment (Baumol, 1967; Berardino &
serves as the economy’s barometer, with stable employment Onesti, 2018). Thus, it is evident from the literature that
growth being the premise of both economic development studies in developed countries have primarily focused on
and social stability. Ensuring and expanding employment the one-way perspective of “industry-driven,” lacking the
stands as an important consideration for the government two-way research of “industry interaction.”
when formulating economic policies. The industry serves Therefore, some studies have shifted their focus to
as the carrier of employment. In the context of mounting developing countries. Taking China as an example,
downward pressure on the economy, the employment Gao & Li (2011) examine the interactive development
interaction between manufacturing and service relationship between various sectors within producer
industries significantly influences the steady expansion of services and manufacturing. Chen & Zhang (2020)
employment. In the future, as the employment absorption determine that manufacturing and producer services
capacity of manufacturing diminishes, job creation exhibit complementary in space and region based on
increasingly depends on the support of the service China’s provincial panel data. They, further, conclude that
industry. Therefore, clarifying the relationship between a significant two-way employment bonus exists between
manufacturing and service industries, particularly in high-tech manufacturing and employment in different
producer services industries, and understanding the types of service industries, providing quantitative evidence
mechanism of employment creation in producer services for the interaction between industries and employment.
industries is not only theoretically significant but also While scholars have employed macrolevel data to discuss
holds practical importance for ensuring employment the employment interaction between manufacturing and
stability and addressing structural problems. producer services, such research has certain shortcomings.
First, macrodata belongs to aggregate data and, when
1.1. Literature review used for measurement, may yield results with inherent
The existing literature on the employment interaction limitations. Second, China’s huge population base creates
between manufacturing and producer services industries substantial employment pressure, making macrolevel data
mainly focuses on developed countries, with abundant far from enough to analyze the employment interaction
research undertaken from both qualitative and quantitative between manufacturing and producer services. Therefore,
perspectives. Henning (2019) delves into the labor it is necessary to seek microlevel evidence to support macro

Volume 10 Issue 2 (2024) 79 https://doi.org/10.36922/ijps.0316