Topic: The Effects of Low-skilled Migration on Corporate Innovation: Evidence from a Natural Experiment in China

Speaker: Prof. GAO Shenghua

Host: Prof. HUANG Ying

Time: 10:30-12:00 October 13th, 2016 (Thursday)

Venue: Room 702

Abstract:  We identify a negative causal effect of migration of low-skilled workers on corporate innovation in the host areas. Our tests exploit the staggered policy change of city-level household registration system in China, which facilitates rural residents to migrate to the city. We find a significant decrease in innovation for firms headquartered in cities that have adopted such policies relative to firms headquartered in cities that have not. This result is more pronounced for firms that rely more on labor and for firms in cities with stronger enforcement of such policies. Overall, our results support the view that an abundant supply of low-skilled workers increases the benefit of using existing low-skill technology and thus reduces firms’ incentive to pursue high-skill new technology.