The Effect Of Technological Innovation On Employment: Threshold Effect Based On Managerial Owership

Employment problem has been the focus of economic research for a long time. As the labor power country of China, accompany the disappearance of population bonus in recent years, employment problem has become one of the focus discussion which affecting the economy growth in long-term. At the same time, China's economic is trying to promote industrial structure upgrade through technological innovation, increase product added value, enhance the international competitive advantage, in order to be one of the technological innovation powerful country. The effect of technological innovation on employment has been widely discussed. In lots of empirical studies, some results show that technological innovation has destroyed a large number of traditional jobs, and there are also studies in support of technological innovation is creating new jobs when the traditional jobs are destroyed as the "employment compensation". As the microscopic subject of employment, enterprises in China are taking on the Institutional Transition. In the process of reform, a series of "principal-agent" problems have emerged gradually, The result makes the effect of technology innovation on employment become more complex. This paper selects 238 public companies in 2009-2013 as the research object to discuss the effect of technological innovation on employment based the "substitution effect" and "welfare effect" theory from the effect of process innovation and product innovation on employment by Katsoulacos(1986), the measurement model about effect of technology innovation on employment by Garcia(2002), and the hypothesis of interest convergence effects or managerial entrenchment effects by Morck(1988).First of all, the technology innovation is divided into process innovation and product innovation on the traditional theory. This paper further draws on the concept of the welfare economics to define the technological innovation activities of enterprises as the three levels of technological innovation investment, innovation performance and innovation performance vulnerability. As the observation of the current situation of the three, the most important problem of technological innovation in China's enterprises is not the growth of technological innovation investment and innovation performance, but is the vulnerability of innovation performance. Most of the enterprise's innovation performance level is vulnerability, the main cause of the enterprise innovation performance vulnerability is “innovation poverty”. Due to the lack of the ability to respond to the innovation risk, the vulnerability of innovation performance is deteriorating. Although some of the enterprises get rid of the innovation poverty in the short term, but innovation performance vulnerability makes them Fell into the trap of innovation poverty.On the basis analysis of three levels about enterprise technological innovation, this paper uses threshold panel regression model by Hansen(1999), make a threshold variable as managerial owership to analysis the nonlinear effects of the creation effect and the destruction effect of the enterprise's technological innovation on employment for industries and natures. The results show that in the process of enterprise Institutional Transition, both state-owned enterprises or private enterprises, the effect of technological innovation investment on employment are performance create effection at first then turn to destruction effection when managerial ownership growths. The differences between the two are that the create effection on employment is higher and the of the destruction effection is lower in private enterprises than state-owned enterprises. But the difference from industries makes the effect of technological innovation investment on employment in manufacturing enterprise is first distruct then creat and be in different way in non-manufacturing enterprise. There are two threshold effects for innovation performance on employment. Among the two, the effect of innovation performance on employment performs destroy-create-destroy for state-owned enterprises, and performs creat-destroy for private enterprises. The effect of innovation performance on employment in manufacturing enterprise is weaker than in non-manufacturing enterprises. The effect of innovation performance vulnerability on employment performs creat-destroy threshold effect. The destroy effect level of innovation performance vulnerability on employment is loosing by managerial entrenchment effects.Finally, this paper decomposite the innovation performance vulnerability into innovation povertu and innovation risk, the result shows that the effect of innovation poverty on employment performs creat-destroy-creat. But because of the difference from nature of enterprises, managerial entrenchment effects make innovation poverty destory employment in state-owned enterprises and creat employment in private enterprises when the rate of managerial owership in high level. The effect of innovation poverty on employment performs creat-destroy in manufacturing enterprises and the opposite way in non-manufacturing enterprises. The effect of innovation risk on employment performs destroy-creat, and the interest convergence effects enhance destroy level when innovation risk destroy employment. The difference of innovation risk effect on employment from nature of enterprises is in low managerial ownership level, and The difference of innovation risk effect on employment from industries is not significant.