Labor Costs And Innovation: Empirical Research Based On Private Enterprises

Innovation and technological progress are important measures in China to transform its economic growth mode and increase productivity under the new situation.As the main body of innovation,especially private enterprises,when the relative increase in the price of labor factors and enterprises face greater survival risks,will enterprises increase other input factors such as capital for corporate innovation?Based on the 2002-2012 China Private Enterprise Survey(CPES),Population Census of China in 2005 and China Statistical Yearbook,we construct a DID model by Enforcement of "Minimum Wage Regulations",to study whether minimum wage standards can promote business innovation and a robustness test using placebo and event studies.According to the theory of heterogeneous labor and borrowing from the method of Card(1992),we use the proportion of workers aged 16-19,20-24 and 16-24 at provincial-level to divide the treatment group and the control group.The study found that:(1)the rise in labor costs will significantly increase the R&D investment of private enterprises,and this effect has a significant lagging effect and cumulative effect;(2)private industrial enterprises(especially those above the sacle)are more affected by rising labor costs than other private enterprises and are more motivated to carry out technological innovation.(3)the innovation input of private industrial enterprises below the scale has not been significantly affected by rising labor costs.