Technological catching-up, sales dynamics, and employment growth: Evidence from China's manufacturing

Giovanni Dosi, Xiaodan Yu

Research output: Journal PublicationArticlepeer-review

12 Citations (Scopus)
32 Downloads (Pure)


This article investigates the microeconomics of employment dynamics, using a Chinese manufacturing firm-level data set over the period 1998-2007. It does so in the light of a scheme of "circular and cumulative causation," whereby firms' heterogeneous productivity gains, sales dynamics and innovation activities ultimately shape the patterns of employment dynamics. Using firm's productivity growth as a proxy for process innovation, our results show that the latter correlates negatively with firm-level employment growth. Conversely, relative productivity levels, as such a general proxy for the broad technological advantages/disadvantages of each firm, do show positive effect on employment growth in the long-run through replicator-type dynamics. Moreover, firm-level demand dynamics play a significant role in driving employment growth, which more than compensate the labor-saving effect due to technological progress. Finally, and somewhat puzzlingly, the direct effects of product innovation and patenting activities on employment growth appear to be negligible.

Original languageEnglish
Pages (from-to)79-107
Number of pages29
JournalIndustrial and Corporate Change
Issue number1
Publication statusPublished - 1 Feb 2019

ASJC Scopus subject areas

  • Economics and Econometrics


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