Exports and Employment in China, Indonesia, Japan and Korea

This paper examines the effects of exports on employment in China, Indonesia, Japan and Korea. It draws on input-output data for the period from 1995 to 2009 to estimate the effects on each industry's employment (i.e. direct effects) and on other industries' employment through intra-industry linkages (i.e. indirect effects). There are four major findings. First, at the aggregate level, the implied employment from exports increased in China, Japan and Korea. Second, at the industry level, exports and the shares of implied employment from exports increased in machinery-related industries such as Machinery (NEC), Electrical and Optical Equipment, and Transport Equipment in China, Indonesia and Korea. Third, although more than 80% of exports in the four study countries are from manufacturing industries, the employment effects are not limited to manufacturing industries. A significant number of workers in non-manufacturing industries depend upon manufacturing exports through vertical inter-industry linkages. Non-manufacturing industries account for between 40% and 60% of the implied employment from exports. Finally, in 2009, the share of implied employment from Chinese final demand exceeded that from the US final demand in both Japan and Korea. An implication of the overall results is that even in cases where an industry is not particularly directly export-oriented, the industry may still be subject to potential effects – positive or negative – of changes in export demand.