Employment Protection Legislation, Cost Stickiness, and Corporate Response
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| Title | Employment Protection Legislation, Cost Stickiness, and Corporate Response
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| Author | Liu Yuanyuan and Liu Bin |
| Organization | Peking University; Chongqing University |
| Email | anlikui333@163.com; drliubin@263.net;liubin@cqu.edu.cn |
| Key Words | Employment Protection Legislation; Cost Stickiness; Corporate Response |
| Abstract | This paper examines how the implementation of labor contract law affected the cost stickiness of labor for China’s A-share listed firms in manufacturing industry from year 2004 to 2011, and how those firms responded by replacing labor with machinery equipment. Our results show that the labor contract law has aggravated the cost stickiness of labor for all firms, in terms of total pay and average pay (price). As for those private enterprises, the aggravation effect of labor contract law is much greater, especially in terms of total pay and number of employees (quantity). Finally, all firms, especially those private enterprises, are more likely to replace labor with machinery equipment after the implementation of this new labor contract law; results hold the same after we adjust machinery equipment by number of employees. |
| Serial Number | WP598 |
| Time | 2014-01-28 |
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