This article presents empirical evidence on the impacts of product innovation, export, and other important factors on employment growth in Chinese manufacturing industries over the period 2000-2006. The results of our analysis show that the overall demand effect of firms' output growth on their average yearly employment growth amounts to 7.0%, of which 3.5%, 1.2%, 1.6%, and 0.7% correspond to the output growth of, respectively, domestic-old, export-old, domestic-new and export-new products. The displacement effect from process and organizational innovations, as measured by firms' productivity efforts to catch up with industry regional productivity frontiers, accounts for a 5.4% average reduction of yearly employment growth. We also observe a trade-off between growth of productivity and growth of employment, which could have been on average higher by 2% for productivity (16.8% instead of 14.8%) and lower by 2% for employment (1.4% instead of 3.4%).
- j21 - Labor Force and Employment, Size, and Structure
- o31 - Innovation and Invention: Processes and Incentives