Abstract: Studying the main influencing factors of employment growth in China, as a constructive attempt for future employment expansion, has important practical significance. This paper decomposes the determinants of employment into increased labor productivity factor, technological progress factor, and economic growth factor, using non-competitive input-output table reflecting processing trade and structural decomposition techniques. An empirical study is carried out based on 2002-2007 and 2007-2012 input-output tables. In addition, we raise some policy suggestions which ensure the employment rate during economic structure transformation and upgrading. The results show that, economic growth is the driving force of employment growth in various industries, whereas increased labor productivity hinders employment growth. Technological progress will promote the tertiary industry employment, but exert pressure on the secondary industry employment. Among the factors of economic growth, consumption and capital formation mainly promote D employment and export promotes P employment. Optimizing and upgrading consumption structure, investment structure and export structure effectively stimulates the tertiary industry employment, but decreases the secondary industry employment. Hence, structural unemployment in traditional manufacturing sectors should be prevented as consumption structure, investment structure and export structure get optimized.

Key words: employment growth, DPN model, structural decomposition analysis, influencing factors