Employment effects of China’s manufacturing outward migration: a study based on cross-country input-output model

ZHU Kepeng1 FAN Shide2

(1.School of Business, Anhui University of Technology)
(2.School of Economics, Nanjing Audit University)

【Abstract】With escalating labor costs and industrial upgrading, some manufacturing industries are migrating outward from China. The paper establishes a cross-country input-output model by the data of World Input-Output Database. It empirically analyzes the characteristics of China’s manufacturing outward migration and its employment effects from 2009 to 2014. The paper finds that most migrations are active rather than passive. The industries that migrate outward are likely to be labor intensive or pollution-intensive while the skill-intensive industries migrate inward. The outward migration has little impact on domestic employment, with only 0.095% of jobs being affected annually, which cannot explain the recent declines in manufacturing employment. Labor-intensive industries and low-skilled workers are more affected, especially in the industries with production migrations of intermediate and final domestic goods. In the new stage of development, we should combine the manufacturing migrations with upgrading of industrial structure, improvement of labor quality, and enhancement of environmental governance.

【Keywords】 manufacturing migration; cross-country input-output model; employment effects;


【Funds】 General Project of Philosophy and Social Science Planning of Anhui Province (AH-SKYG2017D133)

Download this article


    [1]. ① According to the 2014 data in World Input-Output Database (2016 edition), the industries ranked in ascending order of capital labor ratio are: manufacture of textiles, wearing apparel and leather products; manufacture of furniture and other manufacturing; manufacture of wood and of products of wood and cork, except furniture; manufacture of machinery and equipment; printing and reproduction of recorded media; manufacture of food products, beverages and tobacco products; manufacture of electrical equipment; manufacture of fabricated metal products, except machinery and equipment; manufacture of rubber and plastic products; manufacture of other non-metallic mineral products; manufacture of motor vehicles, trailers and semi-trailers; manufacture of other transport equipment; manufacture of computer, electronic and optical products; manufacture of paper and paper products; manufacture of basic metals; manufacture of chemicals and chemical products; manufacture of basic pharmaceutical products and pharmaceutical preparations; and manufacture of coke and refined petroleum products. The industries of outward migration such as industries of textile, wood and straw products are relatively high in labor intensity, which are typical labor-intensive industries, while the manufacture of paper and paper products that migrates outward is relatively low in labor intensity, which is a pollution-intensive industry, according to the identification of Wang et al. (2017). [^Back]


    1. Chen, Z. & Ma, H. China Industrial Economics (中国工业经济), (4) (2010).

    2. Han, M. & Zhang, L. The Journal of Quantitative & Technical Economics (数量经济技术经济研究), (9) (2015).

    3. Jiang, Y. & Wang, F. Shanghai Journal of Economics (上海经济研究), (7) (2012).

    4. Li, L. et al. Economic Research Journal (经济研究), (8) (2016).

    5. Liu, H. & Liao, Q. World Economy Studies (世界经济研究), (3) (2017).

    6. Luo, L. & Huang, N. Shanghai Journal of Economics (上海经济研究), (8) (2008).

    7. Lv, Y. & Wang, D. The Journal of Quantitative & Technical Economics (数量经济技术经济研究), (9) (2011).

    8. Shi, Q. & Zhang, L. The Journal of Quantitative & Technical Economics (数量经济技术经济研究), (9) (2017).

    9. Wang, J. & Huang, X. Finance & Trade Economics (财贸经济), (6) (2011).

    10. Wang, Q. et al. Acta Scientiarum Naturalium Universitatis Pekinensis (北京大学学报(自然科学版)), (1) (2017).

    11. Wei, R. & Zhuang, Z. The Journal of World Economy (世界经济), (1) (2015).

    12. Yu, G. & Wang, W. Journal of International Trade (国际贸易问题), (6) (2013).

    13. Amiti M., Wei S. J., Haskel J., Auriol E. (2005), Fear of Service Outsourcing: Is it Justified?. Economic Policy. 20 (42): 307–347.

    14. Anderton B., Brenton P. (1999), Outsourcing and Low-skilled Workers in the UK. Bulletin of Economic Research. 51 (4): 267–286.

    15. Bayoumi T., Lipworth G. (1998), Japanese Foreign Direct Investment and Regional Trade. Journal of Asian Economics. 9 (4): 581–607.

    16. Chen X., Cheng L. K., Fung K. C., et al. (2012), Domestic Value Added and Employment Generated by Chinese Exports: A Quantitative Estimation. China Economic Review. 23 (4): 850–864.

    17. Elia S., Mariotti I., Piscitello L. (2009), The Impact of Outward FDI on the Home Country’s Labor Demand and Skill Composition. International Business Review. 18 (4): 357–372.

    18. Feenstra R.C., Hanson G.H. (1996), Globalization, Outsourcing, and Wage Inequality. The American Economic Review. 86 (2): 240–245.

    19. Feenstra R. C., Hong C. (2010), China’s Exports and Employment. In Feenstra R.C., Wei S. J. eds., China’s Growing Role in World Trade, Chicago: University of Chicago Press.

    20. Hansson P. (2005), Skill Upgrading and Production Transfer within Swedish Multinationals. The Scandinavian Journal of Economics. 107 (4): 673–692.

    21. Hijzen A., Görg H., Hine R.C. (2005), International Outsourcing and the Skill Structure of Labor Demand in the United Kingdom. The Economic Journal. 506 (115): 860–878.

    22. Hummels D., Jorgensen R., Munch J. R, Xiang C. (2011), The Wage Effects of Offshoring: Evidence from Danish Matched Worker- Firm Data. NBER Working Paper. No. 17496.

    23. Kambayashi R., Kiyota K. (2015), Disemployment Caused by Foreign Direct Investment? Multinationals and Japanese Employment. Review of World Economics. 151 (3): 433–460.

    24. Koller W., Stehrer R. (2010), Trade Integration, Outsourcing and Employment in Austria: A Decomposition Approach. Economic Systems Research. 22 (3): 237–261.

    25. Lipsey R. E., Ramstetter E. D., Blomstrom M. (2000), Outward FDI and Parent Exports and Employment: Japan, the United States, and Sweden. NBER Working Paper. No.7623.

    26. Mariotti S., Mutinelli M., Piscitello L. (2003), Home Country Employment and Foreign Direct Investment: Evidence from the Italian Case. Cambridge Journal of Economics. 27 (3): 419–431.

    27. Navaretti G. R., Castellani D., Disdier A. (2010), How does Investing in Cheap Labor Countries Affect Performance at Home? Firm-level Evidence from France and Italy. Oxford Economic Papers. 62 (2): 234–260.

    28. Slaughter M. J. (1995), Multinational Corporations, Outsourcing, and American Wage Divergence. NBER Working Paper. No. 5253.

    29. Strauss-Kahn V. (2004), The Role of Globalization in the Within- Industry Shift away from Unskilled Workers in France. In Baldwin R. E., Winters L. A. eds., Challenges to Globalization: Analyzing the Economics. Chicago and London: University of Chicago Press.

    30. Onaran Ö. (2012), The Effect of Foreign Affiliate Employment on Wages, Employment and the Wage Share in Austria. Review of Political Economy. 24 (2): 251–271.

This Article


CN: 11-1043/C

Vol , No. 01, Pages 33-46+126-127

February 2019


Article Outline


  • 1 Introduction
  • 2 Research method
  • 3 Empirical results
  • 4 Further discussion
  • 5 Conclusion and implication
  • Footnote