LABOR MARKET INTEGRATION AND FIRMS’ EXPORT PRODUCT QUALITY: EVIDENCE FROM CHINA

Faced with mounting challenges in global export markets, companies and governments actively seek effective strategies to enhance the quality of export products and strengthen international competitiveness. This study investigates the crucial role of labor market integration in achieving these goals in the Chinese context. We first detail that labor market integration is linked with the quality of export products via three channels: (1) innovation efficiency, (2) production efficiency and (3) product market competition. Second, we empirically assess the theoretical links between labor market integration and export product quality using data from Chinese enterprises. We find that labor market integration has an inverted U-shaped impact on export product quality. This impact is mediated through product market competition, innovation and firm production efficiency. From a public policy perspective, our findings stress the importance of speeding up labor market integration to improve export product quality and innovation and production efficiency of firms.