Heterogeneous firm responses to increases in high-skilled workers: Evidence from China's college enrollment expansion

Shuaizhang Feng and Xiaoyu Xia

China Economic Review, 2022, vol. 73, issue C

Abstract: Over the past several decades, the returns to college education have steadily increased in many countries of the world despite an increased supply of college graduates. In this paper, using local-labor market data on the composition of the labor force combined with detailed firm-level data covering the period of a large-scale expansion of college enrollment in China, we seek to identify within-firm adjustments to labor market changes. The empirical work is guided by a model in which there are two types of production technologies, characterized by two different types of capitals, one skill-biased and the other labor-biased. The empirical results, consistent with the model and the observed trends in schooling and rates of return, indicate that there were significant adjustments in capital and R&D within-firms in response to an enlarged college-educated labor force.

Keywords: Local labor market; Firm-level adjustment; College education; Chinese economy (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:73:y:2022:i:c:s1043951x22000499

DOI: 10.1016/j.chieco.2022.101791

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