Does Female Labor Scarcity Encourage Innovation?: Evidence from China's Gender Imbalance

44 Pages Posted: 25 Jul 2016

See all articles by Tan Zhibo

Tan Zhibo

Fudan University - School of Economics; Peking University

Xiaobo Zhang

International Food Policy Research Institute (IFPRI)

Date Written: July 1, 2016

Abstract

Facing scarcity of a production factor, a firm can develop technologies to either substitute the scarce factor (price effect) or complement the more abundant factors (market size effect). Whether the market size effect or the price effect dominates largely depends on the elasticity of substitution among factors according to the theory of directed technical change. However, it is a great challenge to empirically test the theory because factor prices are often endogenously determined. In this paper, we use imbalanced sex ratios across Chinese provinces as a source of identification strategy to test how female labor scarcity affects corporate innovation based on the matched dataset of annual surveys of industrial firms in China and the national patent database. In regions with a large male population, female-intensive industries face more serious problems finding female workers than their male-intensive counterparts. We find that such female shortages have spurred firms in female-intensive industries to innovate more. The pattern is much more evident in industries with low substitution between female and male workers than in those with high substitution, consistent with the predictions of directed technical change theory.

Keywords: CHINA, EAST ASIA, ASIA, prices, markets, labor, technology, innovation, gender, factor endowment, directed technical change, price effect, market size effect, elasticity of substitution

JEL Classification: O31, O32, J21

Suggested Citation

Zhibo, Tan and Zhibo, Tan and Zhang, Xiaobo, Does Female Labor Scarcity Encourage Innovation?: Evidence from China's Gender Imbalance (July 1, 2016). IFPRI Discussion Paper 1540, Available at SSRN: https://ssrn.com/abstract=2813411

Tan Zhibo (Contact Author)

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Xiaobo Zhang

International Food Policy Research Institute (IFPRI) ( email )

2033 K Street, NW
Washington, DC 20006
United States
202-862-5677 (Phone)
202-467-4439 (Fax)

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