From Growth to Jobs: Empirical Inquiry into China’s Employment Elasticity and Its Macroeconomic Drivers

Aamir Ahmad Teeli, Ch. Sankar Rao, Tahir Nazir, Mohd Asif Shah
Statistika, 106(1): 49–60
https://doi.org/10.54694/stat.2025.23

Abstract
China has remained one of the fastest growing economies of the world for an appreciable period; however, there are concerns around the employment content of these growth achievements. These concerns become more important keeping in view demographic profile of China. To this end current study attempts to estimate employment elasticity of China’s economic growth and examine its macroeconomic determinants. The study uses annual time series data for the period of 1980–2019. Time varying Kalman filter is used to estimate employment elasticity and ARDL is used to examine its macroeconomic determinants. The results of the study revealed drastically low level of employment elasticity in China during the study period. Further the study found that inflation and openness had a negative impact while depreciation had a positive impact on employment elasticity in the long run. Additionally, human capital formation and services sector share have positive but insignificant impact. Further, as a robustness check, the Dynamic Ordinary Least Squares (DOLS) estimation was conducted, and its results were found to be consistent with the ARDL model.

Keywords
Economic growth, employment growth, employment elasticity, TVP approach, China