The Impact of Employee Education and Health on Firm-Level TFP in China

Abstract: This study examines the influence of employee education and health on firm-level Total Factor Productivity (TFP) in China, using panel data from A-share listed companies spanning from 2007 to 2022. The analysis shows that life expectancy and higher education have a significant impact on TFP. More optimal health conditions can result in increased productivity through decreased absenteeism and improved work efficiency. Similarly, higher levels of education can support technological adaptation, innovation, and managerial efficiency. Nevertheless, the correlation between health and higher education indicates that there may be a point where further improvements in health yield diminishing returns in terms of productivity for individuals with advanced education. These findings emphasise the importance of implementing comprehensive policies that improve both health and education, maximising their impact on productivity. This study adds to the current body of research by presenting empirical evidence at the firm-level in China. It also provides practical insights for policymakers and business leaders who want to improve economic growth and competitiveness. Future research should take into account wider datasets, more extensive health metrics, and delve into the mechanisms that contribute to the diminishing returns observed in the relationship between health and education.