IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v155y2026ics0264999325004419.html

Local university expansion and firm innovation: Evidence from skilled labor supply shocks and innovation efficiency

Author

Listed:
  • Yang, Guang-Zhao
  • Si, Qinru
  • Liu, Liang

Abstract

This study examines whether expanding the local supply of highly educated labor raises firm innovation. Existing research links higher-education expansion to aggregate human capital and firm performance but provides limited city-level evidence on firm innovation. Exploiting staggered openings of undergraduate universities across Chinese prefecture-level cities during 2008–2022, and combining city data with listed-firm records, we implement a difference-in-differences design. We find that university openings increase local firms’ patent output and improve innovation efficiency, allowing firms to achieve higher innovative outcomes without additional R&D expenditure, while intensified labor market competition reduces labor costs and further supports R&D activity. By contrast, the creation of vocational colleges or elite universities has only modest effects on local firm innovation, consistent with vocational graduates mainly entering non-R&D jobs and with high mobility among graduates of prestigious universities. These results highlight the importance of local skilled-labor availability and graduate retention for strengthening regional innovation capacity.

Suggested Citation

  • Yang, Guang-Zhao & Si, Qinru & Liu, Liang, 2026. "Local university expansion and firm innovation: Evidence from skilled labor supply shocks and innovation efficiency," Economic Modelling, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:ecmode:v:155:y:2026:i:c:s0264999325004419
    DOI: 10.1016/j.econmod.2025.107446
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999325004419
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2025.107446?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:155:y:2026:i:c:s0264999325004419. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.