From “Made in China” to “Innovated in China”: a new thinking based on labor wage and technological innovation

【Author】

JIANG Dianchun;WANG Xiaoxia;LI Lei

【Institution】

Institute of International Economic Research, Research Center on Multinational Corporations, Nankai University;Institute of International Economic Research, Nankai University;Institute of International Economic Research, Research Center on Multinational Corporations, Nankai University

【Abstract】

Through a review of Hicks’ The Theory of Wages, this paper investigates how China’s rise in labor wage triggers technological innovation of enterprises. We build innovation indicators based on the patent application data. Empirical analysis indicates that rising labor wage would stimulate the manufacturing enterprises to innovate. This stimulating effect is heterogeneous: the rise in labor wages mainly encourages enterprises to do more appearance designs rather than inventions and innovations; the rise in labor wage of high-skilled labor has a greater stimulating effect on innovation; the labor-intensive enterprises, state-controlled enterprises and enterprises in western China are easier to be affected by the wages. In addition, mechanism analysis shows that the rise in labor wages will encourage enterprises to conduct technological research and product innovation by reducing profit rate. Finally, this paper also indirectly confirms that the rise in labor wage can lead to labor-saving technological change. Under the structural transformation of China’s manufacturing industry, the government should make full use of policy tools and market mechanisms to promote enterprises to transform from “Made in China” to “Innovated in China.”

【Keywords】

labor wage;induced invention;patent application;skill wage

References

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Springer Journals Database

Total: 21 articles

  • [1] Yao Zhanqi Xia Jiechang, Capital Deepening, Technology Progress and their Effects on China’s employment, World Economy,
  • [2] 张庆昌;李平;, Productivity and Hypothesis of Innovation Wage Threshold, The Journal of Quantitative & Technical Economics,
  • [3] Ding Shouhai, An Analysis of Minimum Wage Effects on the Labor Market——Effect of Interaction with the Law of the PRC on Employment Contracts, Social Sciences in China,
  • [4] Ma Shuanga, Zhang Jieb and Zhu Xic (a:Southwestern University of Finance and Economics; b:Texas A&M University; c:Shanghai Jiaotong University), The Effect of Minimum Wage on Average Wage and Employment, Economic Research Journal,

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