Abstract
Purpose - It has been expected that following the accession to the World Trade Organization, China would reconfigure its agricultural trade pattern more in line with its perceived comparative advantages in labor intensive products, which would generate positive farm employment effect. These speculations have not been investigated empirically in the current literature. This paper therefore aims at systematically estimating the agricultural trade induced farm employment effects in China.Design/methodology/approach - Using detailed agricultural trade and production data during 1994-2009, we estimate the "labor contents" of agricultural trade flows and use these estimates to compute the farm employment effects. Findings - We find that China’s agricultural trade has indeed generally developed along its widely believed comparative advantages and disadvantages; however, the farm employment "creation" effect due to labor intensive exports has actually been dominated by the employment "substitution" effect due to increased land intensive imports, thereby mostly resulting in net farm employment in the post-WTO accession era. This paradoxical finding can be rationalized by three pieces of evidence: shifting agricultural trade balance in favor of land intensive imports, higher absolute unit labor contents in land intensive subsectors than in labor intensive subsectors, and continuous declines of labor uses in both land and labor intensive subsectors possibly due to agricultural productivity growth.Originality/value - Findings from this first systematic attempt to estimate the trade-induced farm employment effects do not lend support to the popular notion that increased agricultural trade would help increase farm employment and have important implications for evaluating current and future trade policy in China and elsewhere.
Purpose - It has been expected that following the accession to the World Trade Organization, China would reconfigure its agricultural trade pattern more in line with its perceived comparative advantages in labor intensive products, which would generate positive farm employment effect. These speculations have not been investigated empirically in the current literature. This paper therefore aims at systematically estimating the agricultural trade induced farm employment effects in China.Design/methodology/approach - Using detailed agricultural trade and production data during 1994-2009, we estimate the "labor contents" of agricultural trade flows and use these estimates to compute the farm employment effects. Findings - We find that China’s agricultural trade has indeed generally developed along its widely believed comparative advantages and disadvantages; however, the farm employment "creation" effect due to labor intensive exports has actually been dominated by the employment "substitution" effect due to increased land intensive imports, thereby mostly resulting in net farm employment in the post-WTO accession era. This paradoxical finding can be rationalized by three pieces of evidence: shifting agricultural trade balance in favor of land intensive imports, higher absolute unit labor contents in land intensive subsectors than in labor intensive subsectors, and continuous declines of labor uses in both land and labor intensive subsectors possibly due to agricultural productivity growth.Originality/value - Findings from this first systematic attempt to estimate the trade-induced farm employment effects do not lend support to the popular notion that increased agricultural trade would help increase farm employment and have important implications for evaluating current and future trade policy in China and elsewhere.