THE IMPACT OF THE BELT AND ROAD INITIATIVE ON FIRMS' EMPLOYMENT STRUCTURE AND WAGE - EVIDENCE FROM CHINA'S PUBLIC LISTED FIRMS

In this paper, we use the Belt and Road Initiative (B&R) as a semi-natural experiment and apply a difference-in-difference analysis together with the propensity score matching approach to estimate the impact of the B&R on China's A-Share listed firms with outbound FDI to the B&R countries during 2011-2017. We find that China's firms investing in B&R countries, compared to those investing elsewhere in the world, tend to reduce their total employment, increase the share of skilled labor, and increase wages. Various tests show that the key results of B&R impacts remain robust. We also find that the adjustment after investing in B&R countries is mainly found in non-SOEs, the firms in key provinces that enjoy pilot B&R policies. Both vertical and horizontal FDI firms are found to significantly adjust their employment, skill structure, and wage payment, with the former as more responsive.