Abstract:

Employment is pivotal to people’s wellbeing. In an era of unprecedented change， stabilizing market entities has become a key factor in “stabilizing employment and ensuring living standards” in China. As vital market players， both domestic-owned enterprises （DOEs） and foreign-owned enterprises （FOEs） play an irreplaceable role in stabilizing employment. Analyzing the employment effects of these enterprises and their economic linkages can provide valuable insights for policymakers in designing policies. Based on the OECD-AMNE and OECD-TiM database， for the first time， firm heterogeneity is incorporated into the spillover-feedback effects model， and vectors are compiled that distinguish employment in DOEs and FOEs. The employment effects of economic linkages between DOEs and FOEs in China from 2005-2016 are captured in this paper， with a particular focus on multiplier， spillover， and feedback effects， and a fresh look at the role played by FOEs in employment creation in China. The results show that both DOEs and FOEs in China have significant spillover effects on each other’s employment. Among them， the employment effects through spillover effects keep rising constantly for DOEs to FOEs， while these employment effects fall in fluctuation for FOEs to DOEs. Traditional statistical data underestimate the role of FOEs in employment creation. However， when considering the interaction between heterogeneous enterprises， FOEs in China contribute an average of 10% of national employment each year. Specifically， in various sectors of DOEs， the employment of Agriculture （AGR）， Trade and Transportation （TTC）， and High-tech manufacturing sector （HTI） is greatly affected by the spillover effect of FOEs， while for various sectors of FOEs， the employment of Postal， Telecommunications， Financial and Business Services （FBS）， Trade and Transportation （TTC）， and High-Tech manufacturing sector （HTI） is greatly affected by the spillover effect of DOEs. Furthermore， the employment creation related to FOEs is mainly concentrated in the service industry， especially Trade and Transportation （TTC）. The research results not only enrich the understanding of the impact of international investment by multinational enterprises on a country’s employment， but also provide a useful theoretical basis for the government to keep the operations of market entities stable and maintain employment stable.

Key words: domestic-owned and foreign-owned enterprises, the interaction between enterprises, spillover effects, employment