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. 2022 Aug 4;17(8):e0268287.
doi: 10.1371/journal.pone.0268287. eCollection 2022.

Can rising labor costs boost private sector R&D investment? : Evidence from a survey of Chinese private firms

Chuyao Deng  1 , Yang Liu  2 , Doudou Gu  2
Affiliations

Can rising labor costs boost private sector R&D investment? : Evidence from a survey of Chinese private firms

Chuyao Deng et al. PLoS One. .

Abstract

This paper constructs a double difference model (DID) based on the China Private Enterprise Survey (CPES) data over the period 1995-2019, combined with the 2005 national census data and considering the policy shock of the implementation of the Chinese government's Minimum Wage Regulation in March 2004, to investigate whether rising labor costs promote private firms' innovation investment. Robustness tests are conducted using placebo tests and event study methods. The study finds that (1) rising labor costs significantly increase private firms' R&D investment and that this effect has significant lag and cumulative effects; (2) private industrial firms (especially above-scale private industrial firms) are more affected by rising labor costs than other private firms and have more incentives to increase innovation investment; and (3) innovation investment of below-scale private industrial firms is not significantly affected by rising labor costs.

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Conflict of interest statement

The authors have declared that no competing interests exist.

Figures

Fig 1
Fig 1. Trends in the evolution of R&D investment of enterprises in the treatment and control groups (unit: Million yuan).
Fig 2
Fig 2. Placebo test for randomly selected groups (500 times).
See this image and copyright information in PMC

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