An Examination of the RMB Real Effective Exchange Rate and Employment: Firm-level Evidence from China

This paper empirically examines the impact of changes in the RMB real effective exchange rate on the employment of heterogeneous workers within enterprises based on matched data from the China Industrial Enterprise Database and Customs Database from 2000 to 2007, aiming to provide micro-level evidence for labor-intensive export industries such as textiles and garments to address employment stability under exchange rate shocks. Against the background of increasingly digitalized manufacturing and intelligent industrial systems supported by advanced information transmission and electromagnetic communication infrastructures, understanding employment responses to external economic fluctuations has become increasingly important. The results show that RMB appreciation aggravates unemployment and leads to a more pronounced decline in unskilled employment than in skilled employment. Moreover, unemployment effects are particularly significant in textile, clothing, and leather enterprises that are highly dependent on international trade. These findings provide empirical evidence for maintaining employment stability and industrial resilience in export-oriented manufacturing while offering useful policy implications for sustainable operation and intelligent upgrading of modern industrial systems.