How Data Factors Affect Labour Cost Stickiness: Evidence From China

We examine how data factors influence firms' labour cost stickiness, drawing on China's staggered rollout of open government data (OGD) platforms. Employing a difference-in-differences (DID) approach, we find that OGD significantly reduces labour cost stickiness. Channel analysis suggests that OGD mitigates labour cost stickiness by enhancing managerial macroeconomic awareness-thereby reducing managerial optimism-and by serving as a substitute for labour, which lowers firms' dependence on labour and the associated adjustment costs. The effect is more pronounced among firms with weaker data mining capabilities, limited access to OGD, headquarters located in regions with higher-quality OGD platforms and exposure to heightened uncertainty. Further analysis indicates that OGD prompts firms to hire fewer employees rather than cutting wages. Additionally, we find that the mitigating effect on cost stickiness is limited to labour costs and does not extend to selling, general and administrative (SG&A) expenses. Our results are robust across various sensitivity tests. This study contributes to the literature on cost behaviour and deepens the understanding of the economic value of OGD.