The Impact of Outward FDI on the Employment Skills Structure of Chinese Firms

Abstract

Based on the panel data of China's manufacturing public listed firms from 2011 to 2015, this paper examines the impact of Chinese manufacturing enterprises' foreign direct investment on the employment skills structure using the fixed-effect model. We found that firms with OFDI, compared to those domestic firms, tend to reduce their employment of producer and finance employees, increase the employment of sales, technical and unskilled labor; increase the share of technical workers and reduce the proportion of producer, finance, sales, and unskilled workers. Compare to intermittent OFDI, firms with continuous OFDI have more employment of sales and technical personnel. With respect to OFDI host countries, OFDI toward OECD countries has negative effect on non-skill jobs, while toward non-OECD countries has positive effect on skill jobs, such as finance, sale and techs job. Using the PSM method to conduct an endogenous test, we find that the key results of OFDI impacts remain robust.