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Endogenous skill-biased technology adoption: Evidence from China's college enrollment expansion program

Author

Listed:
  • Shuaizhang Feng

    (Jinan University)

  • Xiaoyu Xia

    (Chinese University of Hong Kong)

Abstract

China's college expansion program, which was implemented in 1999 significantly increased the share of college-educated workers in the urban labor force. We find that returns to education were not responsive to changes in local skill supply be- tween then and 2009. To explain the trend, we develop a model of endogenous technology adoption and predict that increasing the share of college-educated work- ers leads firms to adjust their use of production technology. We construct supply shocks in local labor markets based on policy-driven variations in the changes of college enrollment quotas across cities. Using panel data from over 20,000 large manufacturing firms, we find that an enlarged college-educated labor force causes skill-intensive firms to invest more in capital and R&D as well as employ more workers, evidence that supports the theory of endogenous technology adoption.

Suggested Citation

  • Shuaizhang Feng & Xiaoyu Xia, 2018. "Endogenous skill-biased technology adoption: Evidence from China's college enrollment expansion program," Working Papers 2018-099, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2018-099
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    2. Bollinger, Christopher & Ding, Xiaozhou & Lugauer, Steven, 2022. "The expansion of higher education and household saving in China," China Economic Review, Elsevier, vol. 71(C).

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    More about this item

    Keywords

    human capital; endogenous technology adoption; college education; Chinese economy;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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