Page 86 - IJPS-10-2

International Journal of
Population Studies Employment-driving effect

policies. Zhang (2015) employee micropopulation survey a two-sector model for a city is developed, assuming
data to measure the one-way impact of manufacturing the existence of two types of production sectors in the
employment on service employment at the micro level. city, i: the manufacturing sector, M, and the producer
Specifically, for every job increase in manufacturing services sector, F, the number of laborers absorbed by
from 2000 to 2005, approximately 0.4 jobs in the services the two sectors is denoted as L and L , respectively. The
F
M
industry were created. It is not difficult to see that existing relationship between them is expressed as:
literature either relies on macrolevel research or microlevel L L L (I)
one-way research, lacking comprehensive microlevel two- M F
way driving research. where φ denotes the urbanization rate. It is assumed that
labor is not transferable between the manufacturing and
In summary, there is a limited body of literature producer services sectors; however, surplus labor is freely
exploring the microlevel “industry interaction” perspective transferable. In addition, all of the workers’ income, Y, is
in developing countries, and the theoretical mechanisms in spent on the products of the two sectors, E. The problem of
the existing literature remain vague. This paper conducts maximizing consumer utility and producer profit between
a detailed study on the two-way employment-driving the two sectors, as represented by the simplified production
effects between manufacturing and producer services at function, can be expressed as:
the micro level, using China’s A-share listed companies in
Shanghai and Shenzhen. It further delves into the current U M 1 (II)

F

state of industrial development in China, highlighting
significant differences in the development status of
producer services and manufacturing subsectors. The where, 0<p<1. The form of the Baumol production
study, then, explores the employment-driving effects based function is borrowed here to represent the form of the
on the industry heterogeneity between them. This paper production function for the representative manufacturing
attempts to make the following marginal contributions: and producer services sectors. An implicit assumption is
First, the previous studies have mostly focused on the made that the role of factors other than labor (e.g., capital)
one-way interaction of employment between industries, is fixed. The functions for the representative production
paying less attention to the two-way employment-driving sectors are as follows:
effect between manufacturing and producer services. The M A Le g M (III)
present study calculates the two-way employment-driving M M
effect of manufacturing and producer services in detail at F A Le g F (IV)
F
F
the microlevel, providing a micro basis for the formulation where M and F denote the number of products in the
and implementation of macro policies. To the best of our manufacturing and producer services sectors, respectively.
knowledge, this paper is the first to employ enterprise- A and A denote the level of technological progress in the
F
M
level data to study the two-way employment-driving two sectors. L and L denote the number of laborers in
M
F
effect of manufacturing and producer services. Second, the respective sectors, A L and A L denote the number
F F
M M
by employing the constant elasticity of substitution (CES) of effective laborers, and g and g denote the growth
F
M
production function to construct a novel theoretical rate of labor productivity in the two sectors. In addition,
model, this study derives a more general conclusion assuming that the product prices in the two sectors are P
regarding the two-way employment-driving effect between and P , respectively, the consumer constraint is: M
manufacturing and producer services. Building on this F
theoretical framework, a simultaneous equation model is Y P MP F F (V)
M
employed for analysis, effectively addressing endogenous The consumer utility maximization is expressed as:
problems.
Max U M 1

1.2. Theory U F (VI)

1.2.1. Employment-driving effect of manufacturing st Y .. P MP F
F
M
and producer services
Solving the utility maximization condition and the
Based on the model constructed by Li et al. (2017), this paper above equation yields:
addresses the employment-driving effect of manufacturing
and producer services from both the demand and supply 1 1
sides. It combines the conditions of consumer utility M P (VII)
M
maximization and producer profit maximization. First, F P F
Volume 10 Issue 2 (2024) 80 https://doi.org/10.36922/ijps.0316