A Study on the Labor Cost of Chinese Listed Companies—Based on the Perspective of Labor Contract Law

Given the background of enterprises facing with rising labor costs and shortage of human resources, we use a large sample of firms in China during 2004-2011 to test the sticky characteristic of labor cost. We also test the effect of labor protection on cost stickiness based on the implementation of Labor Contract Law. We find that the labor cost of listing firms in China is sticky, and the stickiness of state-owned enterprises is higher than that of non-state-owned enterprises. Furthermore, implementation of Labor Contract Law increased labor cost stickiness, both state-owned enterprises and non-state-owned enterprises.