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Technological catching-up, sales dynamics and employment growth: evidence from China’s manufacturing firms

Giovanni Dosi and Xiaodan Yu

No 177, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: This paper investigates the microeconomics of employment dynamics, using a Chinese manufacturing firm-level dataset over the period 1998-2007. It does so in the light of a scheme of “circular and cumulative causation”, whereby firms’ heterogeneous productivity gains and sales dynamics, and innovation activities ultimately shape the patterns of employment dynamics. Using firm’s productivity growth as a proxy for process innovation, our results show that the latter correlates negatively with firm-level employment growth. Conversely, relative productivity levels, as such a general proxy for the broad technological advantages/disadvantages of each firm, do show positive effect on employment growth in the long-run through replicator-type dynamics. Moreover, firm-level demand dynamics play a significant role in driving employment growth, which more than compensate the labour-saving effect due to technological progress. Finally, and somewhat puzzlingly, the direct effects of product innovation and patenting activities on employment growth appear to be negligible.

Keywords: Employment Growth; Demand; Product Innovation; Process Innovation; Export; China catching-up (search for similar items in EconPapers)
JEL-codes: D22 J01 O33 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-bec, nep-cna, nep-cse, nep-eff, nep-ino, nep-tid and nep-tra
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:177

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