Do Rising Labour Costs Drive Innovation in Enterprises? Propensity Score Matching Evidence from Chinese Firms

Do Rising Labour Costs Drive Innovation in Enterprises? Propensity Score Matching Evidence from Chinese Firms

This paper uses a monopolistic competition model and propensity score matching (PSM) with Chinese firm‐level data to determine whether rising labour costs drive innovation within enterprises. The results indicate that rising wages do drive firms to invest more in R&D and use more capital to subs...

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Veröffentlicht in:Pacific economic review (Oxford, England) England), 2017-02, Vol.22 (1), p.23-42
Hauptverfasser: Huang, Xianhai, Chen, Hangyu, Yang, Gaoju
Format: Artikel
Sprache:eng
Schlagworte:
Innovations
International
Labor costs
Management science
Monopolistic competition
R&D
Research & development
Studies
Wages & salaries
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Zusammenfassung:This paper uses a monopolistic competition model and propensity score matching (PSM) with Chinese firm‐level data to determine whether rising labour costs drive innovation within enterprises. The results indicate that rising wages do drive firms to invest more in R&D and use more capital to substitute for labour to minimize costs, which improves total factor productivity. The results are verified by several robustness tests.
ISSN:1361-374X
1468-0106
DOI:10.1111/1468-0106.12203