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Who bears the burden of employer compliance with social security contributions? Evidence from Chinese firm level data

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  • Nielsen, Ingrid
  • Smyth, Russell

Abstract

This article utilizes firm level audited data from Shanghai in 2002 and 2003 to examine the extent to which employers shift the burden of compliance with social security obligations back to employees in the form of lower wages. Results from a fixed effects panel model using data on a subset of the firms audited in both years found that 18.9% of the compliance cost was shifted back to employees in the form of lower wages. Separate two-stage least squares estimates with controls for firm size, ownership and industry type for 2002 and 2003 found that the incidence of social insurance contributions on employees increased across the two years. In 2002 the incidence of social insurance contributions on employees was 9.1% and in 2003 this increased to 33.8%. An explanation for the increase in the incidence on employees over the two years is that employer compliance improved in 2003 compared with 2002.

Suggested Citation

  • Nielsen, Ingrid & Smyth, Russell, 2008. "Who bears the burden of employer compliance with social security contributions? Evidence from Chinese firm level data," China Economic Review, Elsevier, vol. 19(2), pages 230-244, June.
  • Handle: RePEc:eee:chieco:v:19:y:2008:i:2:p:230-244
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    Cited by:

    1. Rickne, Johanna, 2013. "Labor market conditions and social insurance in China," China Economic Review, Elsevier, vol. 27(C), pages 52-68.
    2. Iris Claus & Les Oxley & Yong Cai & Yuan Cheng, 2014. "Pension Reform In China: Challenges And Opportunities," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 636-651, September.
    3. repec:taf:rjapxx:v:17:y:2012:i:4:p:616-631 is not listed on IDEAS
    4. Anping Chen & Marlon Boarnet & Mark Partridge & Bin R. Chen & Mingqin Wu, 2014. "Industrial Agglomeration And Employer Compliance With Social Security Contribution: Evidence From China," Journal of Regional Science, Wiley Blackwell, vol. 54(4), pages 586-605, September.
    5. repec:eee:chieco:v:48:y:2018:i:c:p:1-13 is not listed on IDEAS

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