Services Liberalization and Manufacturing Employment Polarization: Evidence from Chinese Listed Manufacturing Firms

Based on the panel data of Chinese listed manufacturing firms from 2012 to 2020, this article examines the impact of services liberalization on the polarization of manufacturing employment from the perspective of workers’ skill structure. The study results show services liberalization exacerbates the polarization of manufacturing employment primarily through equipment upgrades and cost reductions in manufacturing firms, which means that services liberalization leads to an increase in the proportion of high-skilled and low-skilled workers in manufacturing and a decrease in the proportion of middle-skilled workers. The heterogeneity test notes that services liberalization has a more substantial employment effect on private firms, central and west region firms, small- and medium-sized firms, and firms in high-skilled industries. Services liberalization leads to employment polarization for private firms, firms in the west and central region, small- and medium-sized firms, large-sized firms, firms in high-skilled industries, and firms in low- and medium-skilled industries. This article has implications for the synergy between services liberalization policies and employment growth policies.