Beijing, 20 October Employment Growth and Product Innovation in China: A Firm Level Comparison across Provinces and City Districts By Jacques Mairesse † with Yanyun Zhao ‡ and Feng Zhen§ † INSEE-CREST (Paris, France), UNU-MERIT (Maastricht University, Netherlands) and NBER (USA). ‡ Renmin University of China, No. 59 Zhongguancun Avenue, Beijing, China § Central University of Finance and Economics (Beijing, China) and UNU-MERIT (Maastricht University, Netherlands) Beijing Metropolitan International Statistics Forum 2008

Beijing, 20 October OUTLINE Innovation and Employment Data and Descriptive Statistics Empirical Framework and Estimates Employment Growth Decomposition Perspectives and Data Requirements for Further Analysis

Beijing, 20 October Innovation and Employment Innovation and its importance in world development Innovation and employment Assessing the impact of innovation on employment at the firm level: positive or negative? large or small? Present analysis for four industries: Textile, Wearing Apparel, Transport Equipment, Electronic Equipment, and three recent years

Beijing, 20 October Data and Descriptive Statistics NBS’s annual industry survey of all State-owned firms, and non-state-owned firms with sales higher than 5 million RMB Yuan (i.e., Limited-liability, Share-holding, Private, Hong-Kong, Macao and Taiwan, Foreign) Data: , 4 industries: Textile, Wearing appeal, Transport Equipment, Electronic Equipment Cleaning: Sales>=5 million, Employment>=10 Growth rate of Fixed assets, Sales, Labor [5, 95] After that, keep provinces with number of firms>2 Coverage about 60% in four industries, varying from about 50% to 70% across provinces

Beijing, 20 October Descriptive Statistics Growth rate of labor in Textile, Wearing Apparel, Transport Equipment, Electronic Equipment: - China: 5.9 % ; 5.4 %; 8.8 %;13.8 % - Beijing: 5.4 % ; 3.3 %; 7.3 %;10.1 % Corresponding Growth rate of productivity : - China: 29.6% ; 27.1%; 27.2%;27.8% - Beijing: 17.8% ; 17.4%; 19.1%; 21.9%

Beijing, 20 October Descriptive Statistics Growth rate of Output in Textile, Wearing Apparel, Transport Equipment, Electronic Equipment: - China: 35.5 % ; 32.5 %; 36.0 %;41.6 % - Beijing: 23.3 % ; 20.7 %; 24.2 %; 32.0 % 2006 percentage Shares of new products introduced in (NPPO): - China: 5.9% ; 2.8%; 6.5%;10.3% - Beijing: 9.2% ; 5.1%; 9.6%; 54.5%

Beijing, 20 October Descriptive Statistics Growth rate of Output in Textile, Wearing Apparel, Transport Equipment, Electronic Equipment for product innovating firms (all products: “new” and “old”) : - China: 40.3 % ; 40.0 %; 37.2 %; 39.5 % - Beijing: 23.3 % ; 20.7 %; 24.2 %; 32.0 % Corresponding Growth rate of output for product non- innovating firms (“old products”) : - China: 35.1 % ; 32.0 %; 35.7 %; 42.1 % - Beijing: 23.3 % ; 20.7 %; 24.2 %; 32.0 %

Beijing, 20 October Descriptive Statistics Growth rate of Output in Textile, Wearing Apparel, Transport Equipment, Electronic Equipment for product innovating firms (“new products” only) : g 2 -new = (NPPO).(1+ g -all ) - China: 51.6 % ; 71.9 %; 57.2 %; 90.1 % - Beijing: … % ; … %; … %; … % Growth rate of Output for product innovating firms (“old products” only) : g 1 -old = ( g -all ) - ( g 2 -new ) - China: % ; %; %; % - Beijing: … % ; … %; … %; … %

Beijing, 20 October Average growth rates of Employment by provinces

Beijing, 20 October Average growth rates of Output by provinces

Beijing, 20 October Average growth rates of Productivity by provinces

Beijing, 20 October Average percentage share of “New Products” (NPPO) * Note: The proportion of electronic equipment in Beijing is 54.5%, too high to be included in the graph.

Beijing, 20 October Empirical Framework… Labor growth by old productsLabor growth by new products (1) (2) : Output growth of old products: Output growth of new products : Relative efficiency of old and new products

Beijing, 20 October Empirical Framework… Region Dummies Ownership Dummies Sub-industry Dummies (3) Regression model

Beijing, 20 October …and Estimates

Beijing, 20 October Employment Growth Decomposition (4) Employment decomposition Average specific trend Growth due to non-innovators Growth due to product innovators Old products New products

Beijing, 20 October Employment Growth Decomposition (log.) Industry / CountryTextile Wearing Apparel Transport Equipment Electronic Equipment FranceGermanySpainUKItaly Employment growth Average specific trend Growth due to non- innovators Growth due to product innovation of which: old product new product China ( )European Manufacturing ( ) Number of Observations

Beijing, 20 October China ( ) Employment growth (normal growth) Average specific trend Growth due to non-innovators Growth due to product innovation of which: old product new product Industry / CountryTextile Wearing Apparel Transport Equipment Electronic Equipment Number of Observations Employment Growth Decomposition (normal *) * Based on equation (3), but estimated by normal growth rate of labor and output.

Beijing, 20 October Employment Growth Decomposition__ Textile

Beijing, 20 October Employment Growth Decomposition__ Wearing apparel * After cleaning, the number of firms in these provinces are less than 20, and not included in the estimation. * * * * * * * * *

Beijing, 20 October Employment Growth Decomposition__ Transport * After cleaning, the number of firms in these provinces are less than 20, and not included in the estimation. * *

Beijing, 20 October Employment Growth Decomposition__ Electronic * After cleaning, the number of firms in these provinces are less than 20, and not included in the estimation. * * * * * * *

Beijing, 20 October Some references Harrison, R., J. Jaumandreu, J. Mairesse and B. Peters (2008), "Does Innovation Stimulate Employment? A Firm-level Analysis Using Comparable Micro-data from four European countries", NBER WP 14216, August Hall, B.H., F. Lotti and J. Mairesse (2008), "Employment, Innovation, and Productivity:Evidence from Italian Micro-data", Industrial and Corporate Change, 17 (4), pp Ping He, Jinchang Qian, Nannan Lundin, and Fredrick Sjöholm (2008), "Technology Development and Job Creation in China’s Manufacturing Sector", Mimeo presented at the 2d MEIDE Conference, Renmin University, Beijing, April 21-23, …

Beijing, 20 October Perspectives and Data requirements for Further Analysis Process innovation Employment by skills Output prices Wage differentials Other demand shifters: export From firm level analysis to macro analysis: survival, strategic behavior from competitors,... …and more

Beijing, 20 October Last but not Least THANK YOU! Jacques Mairesse ( INSEE-CREST, UNU-MERIT and NBER) “Not everything that can be counted counts, and not everything that counts can be counted.” Albert EINSTEIN