Who Deserves the Credit for Lower Unemployment? Structural Monetary Policy Tools and Corporate Labour Employment in China

ABSTRACT This study examines the employment effects of China's structural monetary policy using a firm‐level DID model from 2007 to 2022. We found that the policy significantly boosts corporate employment and compensation. In addition, this study uses a dual channel: a standard funding supply effect, and a novel, policy‐signalling effect operating through local governments. The impact is greatest for SMEs, labour‐intensive, and financially dependent firms, confirming the policy's targeted nature. Finally, our results show that in state‐influenced economies, targeted policies amplified by government coordination can be powerful tools for achieving macroeconomic stability.