Abstract: With the rising voice of anti-globalization recently, whether the effect of outward FDI on domestic employment is a substitution effect or a promotion effect has become a focus of attention. The paper analyzes the impact mechanisms from the extensive investment margin to the intensive investment margin on domestic employment based on the perspective of dual margin, and uses data from China′s 30 provinces from 2004 to 2014 to carry out empirical tests. The results show that the intensive margin of China′s outward FDI has no significantly positive impact on domestic employment, and this employment promotion effect does come from the extensive margin, the extensive investment margin plays a greater role in promoting employment in manufacturing industry than in service industry, and such employment promotion effect is higher in medium-high skilled manufacturing and low-skilled service industry; analysis of influence channel by means of intermediary effect analysis, we can also find that labor productivity, export and investment are three important transmission paths for the extensive investment margin to influence employment, in particular, by raising domestic labor productivity, promoting exports and increasing investment, the extensive investment margin can create more job opportunities. The above conclusions have rich policy implications for path selection of enterprise to expand overseas.

Key words: outward FDI, intensive margin, extensive margin, employment effect