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Scientific personnel reallocation and firm innovation: Evidence from China’s college expansion

Zhao Rong and Binzhen Wu

Journal of Comparative Economics, 2020, vol. 48, issue 3, 709-728

Abstract: Given that the supply of scientific personnel is inelastic, the expansion of public research may negatively influence private research by driving up the wage of scientific personnel and reallocating them away from private sectors. China's massive college expansion since 1999 and labor market segmentation provide us with a unique opportunity to investigate such a reallocation effect on firm innovation. Consistent with the reallocation hypothesis, we find that China's college expansion negatively influenced firm innovation as well as regional innovation in the short run. Moreover, we provide direct evidence on scientific personnel reallocation by finding that when college expansion was more intensive, highly educated laborers were less likely to choose an industrial job, and those working in industries enjoyed a higher wage rate when holding a professional (research related) job.

Keywords: College expansion; Scientific personnel; Firm innovation; Patenting; China (search for similar items in EconPapers)
JEL-codes: J20 O30 R1 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jce.2019.12.005

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