The impacts of the national innovative city pilot policy on employment––a quasi-natural experiment from China

The National Innovative City Pilot Policy (NICP) is a crucial step in China’s transition to an innovation-oriented nation, profoundly influencing the country’s social development and significantly impacting employment. This paper treats the implementation of the NICP as a "quasi-natural experiment". Based on an analysis of the policy’s mechanism on employment impact, it evaluates the policy’s effect on employment using microdata from publicly listed companies from 2006 to 2019, employing a staggered difference-in-differences model. The findings suggest that the NICP has generally increased employment levels in enterprises. The policy promotes employment through three key mechanisms: talent clustering, alleviating financing constraints, and fostering technological innovation. The policy’s positive effects on employment are particularly evident in the productive service sector and non-high-tech enterprises. Furthermore, the policy has had a more pronounced positive impact on the employment of medium and high-skilled workers, particularly high-skilled workers, relative to low-skilled workers. This paper provides important policy insights for stabilizing and promoting resident employment in the context of achieving innovation-driven development.