Employment growth is a central objective of economic policy, yet the role of internal market integration in shaping labor demand remains understudied. This paper examines the impact of the Unified National Market initiative on firm-level employment, utilizing a panel of Chinese listed companies from 2011 to 2023. Our estimates reveal a robust positive relationship between market integration and labor hiring. This impact is heterogeneous, with stronger responses observed in non-state-owned enterprises, labor-intensive sectors, and the more developed eastern region. We provide evidence for two distinct mechanisms: a production scale effect resulting from expanded market access, and a credit channel driven by the relaxation of financing constraints. Additionally, we document that market integration improves the skill composition of employment and increases the labor share of income. These results underscore the importance of reducing inter-regional barriers to achieve employment growth.
Zhang et al. (2026) studied this question.