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Scientific personnel reallocation and firm innovation: Evidence from China’s college expansion

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  • Rong, Zhao
  • Wu, Binzhen

Abstract

Given that the supply of scientific personnel is inelastic, the expansion of public research may negatively influence private research by driving up the wage of scientific personnel and reallocating them away from private sectors. China's massive college expansion since 1999 and labor market segmentation provide us with a unique opportunity to investigate such a reallocation effect on firm innovation. Consistent with the reallocation hypothesis, we find that China's college expansion negatively influenced firm innovation as well as regional innovation in the short run. Moreover, we provide direct evidence on scientific personnel reallocation by finding that when college expansion was more intensive, highly educated laborers were less likely to choose an industrial job, and those working in industries enjoyed a higher wage rate when holding a professional (research related) job.

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  • Rong, Zhao & Wu, Binzhen, 2020. "Scientific personnel reallocation and firm innovation: Evidence from China’s college expansion," Journal of Comparative Economics, Elsevier, vol. 48(3), pages 709-728.
    • Handle: RePEc:eee:jcecon:v:48:y:2020:i:3:p:709-728
    DOI: 10.1016/j.jce.2019.12.005
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    More about this item

    Keywords

    College expansion; Scientific personnel; Firm innovation; Patenting; China;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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