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Industrial Structure Change and Business Cycle——Theoretical Model and Empirical Test based on Labor Market
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TitleIndustrial Structure Change and Business Cycle——Theoretical Model and Empirical Test based on Labor Market  
AuthorZhao Xujie and Guo Qingwang  
OrganizationUniversity of International Business and Economics; Renmin University of China; 
Key WordsIndustrial Structure Change; Business Cycle; Bayesian Spatial Model 
AbstractThis paper aims to explore the influence mechanisms of industrial structure change on business cycle from labor market perspective. Firstly, we use the dynamic factor model to extract the national business cycle from provincial labor income change and employment change in urban units, and simultaneously capture the co-movements of labor income change and employment change with business cycle respectively, which provides two types of mechanisms for industrial structure change to affect business cycle. Secondly, we study how the employment share changes of the three industries and sectors belong to the secondary industry in urban units affect the co-movement degree through two types of mechanisms by Bayesian spatial model. The results show that the primary industry has ambiguous influence on business cycle, the secondary and tertiary industry increase the macroeconomic fluctuation asymmetrically, and the negative influence of the secondary industry on business cycle is mainly due to the manufacturing sector. Our research has significant policy implication to mitigate downward pressure of business cycle in the process of accelerating the industrial structure upgrading. 
Serial NumberWP934 
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