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IZA Discussion Paper No. 10749
April 2017
Wages, Innovation, and Employment in China

We investigate the role of factor-priced-induced innovation in mediating the employment impact of expanding production in China. Our empirical approach implements concepts developed in Acemoglu (2010) and complements the approaches summarized by Wei, Xie, and Zhang (2017) that focus on directly observable aspects of innovation (R&D, patent activity, etc.); labor-force characteristics including the availability of "surplus" labor, investments in human capital; and investments in physical capital. It complements work on the causes of a decline in labor's share in total output as documented in Bai and Qian (2010) and in Molero-Simarro (2017). Our empirical results to date support the hypothesis that wage-induced technology change has influenced productivity growth in China, at least in the decade of the 1990s, but perhaps less so or not at all after the middle of the next decade.

Communications
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Network Coordination
Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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