This is a translated version of the paper published in Chinese in Social Sciences in China (Zhongguo shehui kexue, 2007, no. 5, pp. 91-103), which has received the "Pei-Kang CHANG Development Economics Award" and "Sun Yefang Economics Award." The authors are grateful to Mr. Tung Chee- hwa, former President of Hong Kong SAR, Chinese University of Hong Kong and National Natural Science Foundation of China (No. 70810107020, 70871108, 60474063) for their financial support. The authors thank Dr Wang Zhi from US International Trade Commission, and anonymous referees for their useful comments. Usual claims are applied.
In this paper we construct an extended non-competitive input-occupancy-output model that captures China's processing trade and also develop a methodology to estimate the domestic value-added and employment generated ...