Events at CERGE-EI
Monday, 21 December, 2015 | 16:30 | Micro Theory Research Seminar
Jan Bena, Ph.D. (Sauder, U. of British Columbia) “Labor-induced Technological Change: Evidence from Doing Business in China”
Sauder School of Business, The University of British Columbia, Canada
Authors: Jan Bena and Elena Simintzi
Abstract: We study how the change in the price of labor alters the direction of technological change using a novel measure that decomposes innovations into products and processes. We use the 1999 U.S.-China bilateral agreement as a shock that lowered the effective labor cost of U.S. firms operating in China. We find that U.S. firms with a presence in China prior to the agreement respond by changing their process-product innovation mix as compared to firms without such presence: a reduction of 19% in process innovations while product innovations do not change. We obtain the same results using a staggered loosening of restrictions on foreign ownership across industries in China over 1995-2012. Our findings suggest that cheap Chinese labor substitutes for labor-saving technological innovation.
Full Text: WILL BE AVAILABLE LATER
