Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 697: Technology Development and Job Creation in China

Nannan Lundin (), Fredrik Sjöholm (), He Ping and Jinchang Qian
Additional contact information
Nannan Lundin: Örebro University, Postal: SE-701 82 Örebro, Sweden
Fredrik Sjöholm: Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
He Ping: National Bureau of Statistics of China
Jinchang Qian: National Bureau of Statistics of China

Abstract: This paper examines how Science and Technology (S&T) contribute to job creation in the Chinese manufacturing sector. The ambition of transforming China into an innovation-oriented nation and the emphasis on indigenous innovation capacity building have placed Science and Technology (S&T) high on the Chinese policy agenda. At the same time, the need for job creation is pressing, both to absorb the huge supply of underemployed people, and to enable the annual 20 million new labor market entrants to find employment. We examine the relationship between S&T and job growth in the Chinese industrial sector. S&T can be expected to have both positive and negative effects on employment. For instance, new technology might increase competitiveness and enable Chinese firms to expand their labor force. On the other hand, new technology might be labor-saving, thereby enabling Chinese firms to produce more output with fewer employees. Based on a large sample of manufacturing firms in China between 1998 and 2004, we analyze how S&T affect employment growth. Our results suggest that S&T activities have no effect on job creation.

Keywords: China; Science and Technology; Job-Creation

JEL-codes: J21; O14; O33

39 pages, February 7, 2007

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