China’s Import Competition, Innovation Strategies, and the Role of Unions

Alessia Matano and Paolo Naticchioni ()
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Paolo Naticchioni: Roma Tre University and IZA

No 202501, AQR Working Papers from University of Barcelona, Regional Quantitative Analysis Group

Abstract: This paper investigates the relationship between China’s import competition and the innovation strategies of domestic firms. Using firm level data from Italy spanning 2005-2010 and employing IV fixed effects estimation techniques, we find that the impact of China’s import competition on innovation varies depending on the type of goods imported (intermediate vs. final). Specifically, imports of final goods boost both product and process innovation, while imports of intermediate goods reduce both. Additionally, we extend the analysis to consider the role of unions in moderating these responses. We find that, in unionized firms, imports' impact on innovation is mitigated, specifically to protect workers' employment prospects

Keywords: China’s Import Competition; Final and Intermediate Goods; Product and Process Innovation; Unions; IV Fixed effects estimations. JEL classification: C33; L25; F14; F60; O30; J50 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2025-03, Revised 2025-03
New Economics Papers: this item is included in nep-cna and nep-cse
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Persistent link: https://EconPapers.repec.org/RePEc:aqr:wpaper:202501

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