Page 87 - IJPS-10-2

International Journal of
Population Studies Employment-driving effect

The conditions for profit maximization by a perspective of industrial upgrading, as the global value chain
manufacturer under perfectly competitive market undergoes upgrading, the transformation and upgrading
conditions are as follows: of the manufacturing industry encounter difficulties
related to low productivity and insufficient power for
W
P = MC = (VIII) technological innovation. Producer services absorb more
MP labor due to increased labor productivity and wage growth.
Here, Wrepresents the wage level of effective labor. The At the same time, serving as an intermediate input in the
marginal output of effective labor in the manufacturing production process of the manufacturing industry, the
sector and the producer services sector is given by first increased supply of producer services has a dual impact.
order condition: On one hand, it reduces the cost for the manufacturing
sector, providing an incentive for it to expand its scale
MP e g M (IX) and thereby drive employment. On the other hand, the
M
MP e g F (X) development and growth of producer services increase
the input of intermediate products in the manufacturing
F
According to the conditions for maximizing the sector. From the perspective of extending the industrial
manufacturer’s profit: chain, the middle link of the manufacturing industry chain
P M e ( g F g M ) (XI) expands, accommodating more labor. In essence, producer
P F services play a positive role in manufacturing employment.
Next, consider a twin-city model featuring cities A
By incorporating the conditions for maximizing and B (Li et al., 2017), where the employment-driving
consumer utility and manufacturer’s profit, we further and spillover effects of manufacturing and producer
solve expressions for labor relations between the services subsectors are based on the principle that when a
manufacturing sector and producer services sector by manufacturing manufacturer producing product i in City
substituting Equations III, IV, and XI into Equation VII. A is subject to a technology shock, and if this technology
Collating them, we obtain: shock originates from the producer services sector as an
A intermediate input, and the technology shock is positive
L A M F L e ( )(1 g M g F ) (XII) (i.e., the shock comes from a high technology in the
F
M
producer services sector), the labor productivity of sector
i will significantly increase, directly raising wage and
A employment levels in sector i. Accordingly, the demand
L A F L e ( )(1 g F g M ) (XIII) for the producer services sector will also rise, thus directly
F
M
M
driving employment. Due to the “profit-seeking” nature
It is evident that employment in the manufacturing of factors, employees in the producer services sector in
sector and producer services sector has a two-way and City B will “flow” to City A, and the “spillover effect” will
positive promoting effect, as indicated by Equations XII be prominent. In other words, the manufacturing sector
and XIII. This provides a solid theoretical basis for further in City A has a positive effect on the employment of the
studying the strength of the employment-driving effect of producer services sector. Based on the above theoretical
manufacturing and producer services. analysis framework, the following hypotheses are
1.2.2. Theoretical analysis proposed.
(i) Hypothesis 1: The employment promotion effect of
Building on the above setting, this paper discusses the manufacturing and producer services is positive.
two-way employment-driving effect of manufacturing and (ii) Hypothesis 2: The high-tech services industry has
producer services from two perspectives. First, considering a more prominent employment-boosting effect on
the perspective of specialization, the deepening of the manufacturing.
social division of labor improves the efficiency of each
sector. The expansion of the manufacturing industry 2. Materials and methods
depends on intermediate goods input, stimulating the
supply of producer services. The increased supply of 2.1. Data sources
producer services naturally results in an expansion of their The data in this paper are mainly sourced from the CNRDS
scale, subsequently increasing the demand for labor. In database of A-share listed companies spanning 2012 –
other words, manufacturing has a positive effect on the 2020. As there is minimal repetition of companies across
employment of producer services. Second, examining the the study period, the obtained data are analyzed as a cross-

Volume 10 Issue 2 (2024) 81 https://doi.org/10.36922/ijps.0316