Do More Innovations Mean Less Reliance on Labor?—Evidence from Listed Chinese Manufacturing Companies in the Final Stage of Industrialization

Abstract

This paper examines the impact of technological innovation on the role of labor within listed manufacturing companies during China’s final stage of industrialization, from a factor input structure perspective. Leveraging a balanced panel dataset from 2012–2021, we find that the rising R&D intensity has increased companies’ labor intensity and therefore factually slowed down the falling trend of labor intensity. This is because through R&D, the companies have both raised the relative productivity of capital and the percentage of well-educated and technically skilled personnel. Consequently, our research suggests that concerns about technological innovation leading to unemployment or diminishing the standing of workers are unnecessary. While the rising trend of labor cost will sustain for a long time, the intensified R&D activities in Chinese manufacturing companies, thanks to the fast-rising level of education for the Chinese since the 1980s, hold the potential not only to further enhance their global competitiveness, but also alleviate the pressure of employment by creating of more jobs.