The Regional Characteristics and employment Effect of the Capital Deepening of China's Manufacturing Sector

Using the provincial panel data of China's 28 provinces from 1993 to 2012,this paper researches the regional characteristics and employment effect of the capital deepening of China's manufacturing sector. The result shows that it has a widespread and significant capital deepening trend in the manufacturing sector. Meanwhile,the trend of capital deepening brings about the phenomenon of capital replacing labor. From the aspect of regional characteristics,the Northeast Region has the most significant capital deepening trend; however,it has the minimum substitution effect of capital to labor. While Middle Region and West Region are experiencing more rapid development of capital deepening,and have the maximum substitution effect of capital to labor. We consider that the phenomenon of capital deepening in manufacturing sector does not only originate from the technological progress,but also originated from the system.