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The effects of rural–urban migration on corporate innovation: Evidence from a natural experiment in China
Author(s) -
Chen Deqiu,
Gao Huasheng,
Luo Jiang,
Ma Yujing
Publication year - 2019
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12280
Subject(s) - china , incentive , exploit , natural experiment , business , labour economics , demographic economics , economic geography , economics , market economy , geography , statistics , computer security , mathematics , archaeology , computer science
Abstract We show that the migration of low‐skilled, rural workers to urban centers has a negative causal effect on innovation of firms in such urban centers. Our tests exploit the staggered relaxation of city‐level household registration system in China, which facilitates rural residents to migrate to cities. 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. Overall, our results support the view that an abundant supply of low‐skilled workers increases the benefit of using existing low‐skilled technology and thus reduces firms’ incentive to innovate.