BRI’s Employment Effect onParticipating Countries and MechanismAnalysis

Yang Zhihong1, Chen Aili2, Wang Xiaolin*3

1 School of Economics and Management, Northwest University, Xi’an, China

2 Institute of Xi Jinping’s Economic Thought, Fujian Academy of Social Sciences, Fuzhou, China

3 Institute for Six-Sector Economy, Fudan University, Shanghai, China

Abstract: Based on the Belt and Road Initiative (BRI) as a quasi-natural experiment, thispaper uses panel data from 124 countries between 2006 and 2019 to build a difference-indifferences(DID) model to investigate the BRI employment effect on participating countriesand mechanisms. We observed that the BRI had significantly increased employment ratesin participating countries, and that this result remained robust after using the instrumentalvariable (IV) to mitigate endogeneity and perform a robustness test. There are differencesin the BRI’s employment effect depending on the income level, labor conditions, andthe digital economy’s development level of BRI countries: compared with low-incomecountries and lower-middle-income countries, the BRI has a more significantly positiveeffect on the employment rates of upper-middle-income and high-income countries; theBRI’s employment effect is stronger in countries with higher labor market efficiencies andbetter labor relations; In countries with higher levels of digital economy, the BRI has arelatively greater positive effect on employment. The BRI has increased employment ratesin participating countries on both the supply and demand sides by building infrastructure,interconnecting industries and resources, and improving human capital through theexchange of human resources. Further analysis suggests that the BRI’s employment effectpromotes the sophistication of participating countries’ employment structures, henceimproving employment quality, and that participating countries’ employment levels maycontinue to improve in the medium and long run.

Keywords: BRI , employment effect, infrastructure, investment

JEL Classification Codes: F66, J18, J21

DOI: 10.19602/j.chinaeconomist.2024.09.04