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

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  • Giovanni Dosi
  • Xiaodan Yu

Abstract

This article investigates the microeconomics of employment dynamics, using a Chinese manufacturing firm-level data set over the period 1998–2007. It does so in the light of a scheme of “circular and cumulative causation,” whereby firms’ heterogeneous productivity gains, 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 labor-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.

Suggested Citation

  • Giovanni Dosi & Xiaodan Yu, 2019. "Technological catching-up, sales dynamics, and employment growth: evidence from China’s manufacturing," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(1), pages 79-107.
    • Handle: RePEc:oup:indcch:v:28:y:2019:i:1:p:79-107.
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    File URL: http://hdl.handle.net/10.1093/icc/dty023
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    Citations

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    Cited by:

    1. Avenyo, Elvis Korku & Konte, Maty & Mohnen, Pierre, 2019. "The employment impact of product innovations in sub-Saharan Africa: Firm-level evidence," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    2. Pietro Moncada-Paternò-Castello, 2022. "Top R&D investors, structural change and the R&D growth performance of young and old firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 1-33, March.
    3. Matteo Deleidi & Claudia Fontanari & Santiago José Gahn, 2023. "Autonomous demand and technical change: exploring the Kaldor–Verdoorn law on a global level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 57-80, April.
    4. Peng Bin & Xiaolan Chen & Andrea Fracasso & Chiara Tomasi, 2020. "Firm employment growth in China: The role of marketization and regional economic factors," Growth and Change, Wiley Blackwell, vol. 51(1), pages 402-439, March.
    5. Borsato, Andrea & Lorentz, André, 2023. "The Kaldor–Verdoorn law at the age of robots and AI," Research Policy, Elsevier, vol. 52(10).
    6. Torreggiani, Sofia & Andreoni, Antonio, 2023. "Rising to the challenge or perish? Chinese import penetration and its impact on growth dynamics of manufacturing firms in South Africa," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 199-212.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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