Yan Zhang (Asian Development Bank Institute, Tokyo): Within-firm wage inequality and corporate innovation: Evidence from China's listed firms

Yan Zhang (Asian Development Bank Institute, Tokyo): Within-firm wage inequality and corporate innovation: Evidence from China's listed firms

Co-author: Miao Miao (South China University of Technology,
Guangzhou)

Abstract

Within-firm wage inequality was largely neglected in the economic literature. However, as the inequality individuals daily facing and mostly exposed to, it could exert significant impacts on employees' behaviors and thus affect firm operation. This paper investigates how within-firm wage inequality influences innovation outcomes in Chinese listed firms. Our fixed-effect as well as IV regression results suggest that wage inequality significantly enhances the patent application. Moreover, this positive effect is confirmed by using the constraint implemented on the wages of managers in central-government-owned enterprises as an exogenous shock. Our results are robust to different firm ownerships and innovation quantiles. This paper generates rather profound policy implications for promoting innovation and for firms' wage design.

BOFIT seminars are held on Tuesdays at 10.30–11.30 in Rauhankatu 19, 3rd floor big meeting room (unless indicated otherwise). Seminars are held in English.

BOFIT seminars are open to all economists interested in the subject areas covered. Please register in advance at bofit(at)bof.fi or by phone +358 9 183 2268 by noon of the preceding day. Visitors will be escorted from Rauhankatu 19 B (Kirjasto/Library) entrance to the seminar room 10 minutes before the seminar.