Trade Openness,Factor Endowments and Increase of Employment:An Empirical Study Based on China's Inter-provincial Panel Co-integration

In this paper,we adopt the models of international trade and search unemployment.Using China’s inter-provincial panel data this paper analyzed how trade openness affects employment since China has started reform and opening.We found that there’s no direct effect of trade openness on employment while the indirect effect of trade openness on employment depend on the factor endowments of a region: if the capital-labor ratio of a region is relatively high,trade openness would reduce employment while if the capital-labor ratio of a region is relatively low,trade openness would increase employment.