Industrial agglomeration and corporate labor investment efficiency: A study based on the industry heterogeneity perspective

A research sample comprising 285 prefecture-level cities and listed enterprises in China between 2005 and 2020 was handpicked to examine the impact of regional industrial agglomeration on the labor investment efficiency of enterprises, along with its heterogeneity effect. The research discovered that industrial agglomeration hinders the labor investment efficiency of enterprises in general. However, manufacturing agglomeration showed an inverted U-shaped relationship with the labor investment efficiency of enterprises. Producer services agglomeration significantly hinders the labor investment efficiency of enterprises. The mechanism test results indicate that industrial agglomeration affects the labor investment efficiency of enterprises via the micro transmission mechanism of financing constraint and labor cost. Industry-specific tests revealed that the effect of manufacturing agglomeration on labor investment efficiency is significant in technology-intensive and high-technology industries, whereas the effect of producer services agglomeration on labor investment efficiency is more significant in resource-intensive industries. The heterogeneity study showed that the effect of industrial agglomeration on the labor investment efficiency of firms differs significantly based on firm characteristics. These findings offer a better comprehension of the microeconomic consequences of industrial agglomeration and broaden the research outlook on the intrinsic mechanisms and extrinsic causal factors of enterprises' labor investment efficiency.