Purpose This paper examines the effect of labor outsourcing on corporate human capital investment. Design/methodology/approach Using a large sample of Chinese listed firms from 2015 to 2024, this paper uses the job training expense to measure corporate human capital investment and uses a dummy variable to indicate whether a firm engages in labor outsourcing in a given year. To establish a credible causal relationship between labor outsourcing and corporate human capital investment, I apply propensity score matching and employ the two-stage least squares method. Findings I find that labor outsourcing increases corporate human capital investment. This finding is robust to a battery of sensitivity tests and is more attenuated for firms facing intense product market competition, for firms with severe financial constraints, and for firms with higher managerial myopia. Originality/value This paper provides new insights into the role of labor outsourcing by incorporating human capital investment in a developing country context.
Ying Wu (Thu,) studied this question.