Labor Protection, Enterprise Innovation, and Sustainable Development

Abstract

As an important way and means to protect the legitimate rights and interests of workers, the implementation of the “Labor Contract Law” is crucial for building and developing harmonious and stable labor relations and the sustainable development of enterprises. Based on the samples of Shanghai and Shenzhen A-share listed enterprises from 2005 to 2013, this paper adopted the difference-in-difference method to empirically test the impact of labor protection on the sustainable development of enterprises and its mechanism. The research finds that the enhancement of labor protection contributes to the sustainable development of highly labor-intensive enterprises, in which enterprise innovation plays a mediating role in the relationship between the two; the heterogeneity test found that labor protection promotes sustainable development more significantly in state-owned enterprises, enterprises in highly market-oriented regions, and large-scale enterprises. This article expands the research on the economic consequences of labor protection and provides empirical inspiration for the improvement of the “Labor Contract Law” system.