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

Alessia Matano () and Paolo Naticchioni ()
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Alessia Matano: University of Barcelona
Paolo Naticchioni: Roma Tre University

No 17764, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: IV fixed effects estimations; China’s import competition; final and intermediate goods; product and process innovation; unions (search for similar items in EconPapers)
JEL-codes: C33 F14 F60 J50 L25 O30 (search for similar items in EconPapers)
Date: 2025-03
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Published - published in: Structural Change and Economic Dynamics, 2025, 73, 423-433

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