Intellectual Property Protection and Labor Employment—A Quasi‐Natural Experiment Based on the Pilot Policy of Intellectual Property Demonstration Cities

ABSTRACT Employment is the cornerstone of people's livelihood. It is closely tied to the fundamental interests of the public and serves as the foundation of social well‐being. Using the 2012 launch of the Intellectual Property (IP) Demonstration City pilot program as a quasi‐natural experiment, this paper applies a multi‐period difference‐in‐differences (DID) approach to empirically examine the impact of IP protection on enterprise employment size. The findings are as follows: (1) The IP Demonstration City pilot significantly promotes enterprise employment expansion through channels such as increased production, alleviated financing constraints, and enhanced physical investment, and the results are robust to various tests; (2) Heterogeneity analysis shows that the pilot has a significantly positive effect on the employment size of enterprises located in inland regions, in high‐tech industries, and in areas with relatively weak IP protection environments; (3) Further analysis reveals that the pilot facilitates human capital upgrading and increases wage levels of workers in pilot cities, but has a negative effect on labor efficiency. The employment‐promoting effect of IP protection is more pronounced in firms that receive higher government subsidies and tax incentives. This study provides theoretical and empirical evidence on how to encourage enterprises to expand employment and improve the quality and adequacy of jobs, offering valuable policy implications for the government to achieve stable and high‐quality employment.