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continue and ask the question whether S&T might affect job growth in the Chinese industry. Onecan think of both positive and negative effects of S&T on employment: positive if they enablethe firm to survive and expand, and negative if labor is substituted for capital.Our analysis of the Chinese industry between 1998 and 2004 shows that the number oflarge an dmediumsizedd firms has increased by about 24 percent while employment hasrisenonlyd by about 4 percent. More importantly, most of the expansion has taken place in firmswithout any S&T: the number of firms without S&T has increased more rapidly than the numberwith S&T, and employment in firms without S&T has grown morequicklyy than employment infirms with S&T. Our econometric analysis aims at answering whether S&T causes thecomparably low job-growth, or if performance is caused by some other observed or unobservedfirm characteristics. One econometric problem is that we only observe job-growth in firms thatremain in the sample (survivals) and this survival might be a function of S&T. We try to controlfor this potential bias using a Heckman two-step procedure where we include the inverse Millsratio from a profit analysis on exit into the regression analysis. This approach seems important in
Employment and Technological Change50the light of a strong positive impact of S&T on the firm's likelihood to stay in the sample. We areinclined to interpret this result as a positive effect of S&T on firm survival but realize that theeffect could also be caused by a lower probability of firms with S&T to be acquired, or a lowerprobability that these firms fall under the size threshold for being included in the largeandmediummsizeddcategory.Controlling for survival has little impact on the result for job-growth: S&T have no orevenan adversee effect o njobgrowthh. The result is stable to the inclusion of a host of variousvariables that might affect job-growth and to estimations in different industries and differentownership groups. The results are also robust when we apply the propensity score matchingestimator: the treatment effects areharmfule in various matching specifications, but not alwayssignificant.The conclusion is that S&T might benecessarytforn Chinafor somef reasons. However,they are not likely to solve thesignificante problem of job-creation in largeand mediummsizeddenterprises. Addressing this concern requires different policies than those focusing on technologydevelopment. From this, it is clear that ther ei eapositive relationship between technologicalchangesandemployment.
Employment and Technological Change51ReferencesAmenábar, A., Watson, E., Hawke, E., Dencik, D., Thewlis, D., & Mod Producciones,(2016).Regression.Antonucci, T., Pianta, M., 2002. Employment Effects of Product and Process Innovation inEurope. International Review of Applied Economics, 16(3):295–307.

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Term
Spring
Professor
N/A
Tags
Economics, Management, technological change

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