Shifting Toward the West? An Analysis of Sectoral Employment Growth Across China's Counties, 2000-2010

Since the late 1990s, the focus of China's regional policies has been redirected to coordinate regional development, and a series of policy shifts have been launched to promote the development of hinterland and interregional equity. This study analyzes how the spatial and sectoral patterns of employment growth have changed between 2000 and 2010 by estimating aggregate and sectoral employment growth equations using county-level employment data. The results support significant beta convergence effects in all sectors in which employment growth is negatively correlated with their initial sectoral shares. Also, preferential policies targeting the western China have successfully stimulated faster sectoral employment growth. However, there are considerable sectoral heterogeneities when examining the effects of policies targeting the central and northeastern China. The results also reveal nonlinear effects of labor pooling economies proxied by initial total employment on sectoral employment growth for the majority sectors. A few other stylized facts are also in line with the expectation.