1. Beijing, 20 October 20081 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). Mairesse@ensae.fr ‡ 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

2. Beijing, 20 October 20082 OUTLINE Innovation and Employment Data and Descriptive Statistics Empirical Framework and Estimates Employment Growth Decomposition Perspectives and Data Requirements for Further Analysis

3. Beijing, 20 October 20083 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 2004-2006

4. Beijing, 20 October 20084 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: 2004-2006, 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

5. Beijing, 20 October 20085 Descriptive Statistics 2004-2006 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 % 2004-2006 Corresponding Growth rate of productivity : - China: 29.6% ; 27.1%; 27.2%;27.8% - Beijing: 17.8% ; 17.4%; 19.1%; 21.9%

6. Beijing, 20 October 20086 Descriptive Statistics 2004-2006 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 2004-2006 (NPPO): - China: 5.9% ; 2.8%; 6.5%;10.3% - Beijing: 9.2% ; 5.1%; 9.6%; 54.5%

7. Beijing, 20 October 20087 Descriptive Statistics 2004-2006 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 % 2004-2006 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 %

8. Beijing, 20 October 20088 Descriptive Statistics 2004-2006 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: … % ; … %; … %; … % 2004-2006 Growth rate of Output for product innovating firms (“old products” only) : g 1 -old = ( g -all ) - ( g 2 -new ) - China: -11.2 % ; -31.9 %; -20.0 %; -50.6 % - Beijing: … % ; … %; … %; … %

9. Beijing, 20 October 20089 Average 2004-2006 growth rates of Employment by provinces

10. Beijing, 20 October 200810 Average growth rates 2004-2006 of Output by provinces

11. Beijing, 20 October 200811 Average growth rates 2004-2006 of Productivity by provinces

12. Beijing, 20 October 200812 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.

13. Beijing, 20 October 200813 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

14. Beijing, 20 October 200814 Empirical Framework… Region Dummies Ownership Dummies Sub-industry Dummies (3) Regression model

15. Beijing, 20 October 200815 …and Estimates

16. Beijing, 20 October 200816 Employment Growth Decomposition (4) Employment decomposition Average specific trend Growth due to non-innovators Growth due to product innovators Old products New products

17. Beijing, 20 October 200817 Employment Growth Decomposition (log.) Industry / CountryTextile Wearing Apparel Transport Equipment Electronic Equipment FranceGermanySpainUKItaly Employment growth5.95.48.813.88.35.914.26.72.5 Average specific trend-30.2-28.3-27.6-32.1-1.9-7.5-5.7-5-5.6 Growth due to non- innovators 32.230.029.333.94.75.412.57.95.8 Growth due to product innovation 3.93.67.112.05.58.07.43.92.4 of which: old product-0.9-2.0-3.6-9.8----- new product4.85.610.721.8----- China (2004-2006)European Manufacturing (1998-2000) Number of Observations1272161995656418446311319454824934618

18. Beijing, 20 October 200818 China (2004-2006) Employment growth (normal growth) 11.411.214.521.4 Average specific trend -50.7-48.2-49.6-60.3 Growth due to non-innovators 55.952.650.260.7 Growth due to product innovation 6.16.813.821.0 of which: old product 1.8-0.10.5-4.3 new product 4.36.913.325.3 Industry / CountryTextile Wearing Apparel Transport Equipment Electronic Equipment Number of Observations 12721619956564184 Employment Growth Decomposition (normal *) * Based on equation (3), but estimated by normal growth rate of labor and output.

19. Beijing, 20 October 200819 Employment Growth Decomposition__ Textile

20. Beijing, 20 October 200820 Employment Growth Decomposition__ Wearing apparel * After cleaning, the number of firms in these provinces are less than 20, and not included in the estimation. * * * * * * * * *

21. Beijing, 20 October 200821 Employment Growth Decomposition__ Transport * After cleaning, the number of firms in these provinces are less than 20, and not included in the estimation. * *

22. Beijing, 20 October 200822 Employment Growth Decomposition__ Electronic * After cleaning, the number of firms in these provinces are less than 20, and not included in the estimation. * * * * * * *

23. Beijing, 20 October 200823 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 2008. 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. 813-839. 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, 2008. …

24. Beijing, 20 October 200824 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

25. Beijing, 20 October 200825 Last but not Least THANK YOU! Jacques Mairesse ( INSEE-CREST, UNU-MERIT and NBER) E-mail: mairesse@ensae.fr “Not everything that can be counted counts, and not everything that counts can be counted.” Albert EINSTEIN