The Effect of Labor Protection on Firms’ Operational Efficiency: Evidence from China’s Labor Contract Law Implementation

We explored the effect of labor protection on firms’ operational efficiency, based empirical data from China. Taking China’s Labor Contract Law implementation in 2008 as a quasi-natural experiment, we constructed difference-in-differences (DID) model to investigate relationship between and efficiency. Based sample Chinese listed companies non-financial sector 2004–2021, analysis results show that can significantly improve firm’s In addition, found positive is more significant among state-owned enterprises regions with higher legal governance degree. This study enriches research explores effects performance by providing evidence China, reveals positively affect long term.