IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v84y2024icp1596-1607.html
   My bibliography  Save this article

How does social security contribution affect enterprise performance: A perpective based on new structural economics

Author

Listed:
  • Yan, Haining
  • Wang, Zijin
  • Shu, Changjiang
  • jennhae, liou

Abstract

This paper empirically analyzes the impact of social security contributions on firm performance using data from China's Shanghai and Shenzhen A-share listed companies from 2010 to 2022. The findings show that social security contributions have an inverted U-shaped relationship with firm performance, which is due to the fact that the human capital effect of social security contributions is greater than the crowding-out effect before the optimal point, and the crowding-out effect is greater than the human capital effect after the optimal point is reached. The above conclusion still holds after a series of robustness tests. In addition, this paper constructs the optimal social security contribution rate for enterprise performance from the relevant theory of factor endowment change in new structural economics, and at the same time finds that deviation from the optimal social security contribution rate reduces enterprise performance. This paper analyzes the heterogeneous roles played by both the social security contribution rate and the optimal social security contribution rate, and it can be found that these results vary across firms with different property rights and factor intensities. The findings of this paper provide policy considerations for setting the optimal social security contribution rate.

Suggested Citation

  • Yan, Haining & Wang, Zijin & Shu, Changjiang & jennhae, liou, 2024. "How does social security contribution affect enterprise performance: A perpective based on new structural economics," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1596-1607.
    • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:1596-1607
    DOI: 10.1016/j.eap.2024.10.035
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592624002893
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2024.10.035?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Minh Quang Dao, 2013. "Factor endowment, human capital, and inequality in developing countries," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(1), pages 98-106, January.
    2. Conti, Maurizio & Sulis, Giovanni, 2016. "Human capital, employment protection and growth in Europe," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 213-230.
    3. Yao, Yao & Ivanovski, Kris & Inekwe, John & Smyth, Russell, 2020. "Human capital and CO2 emissions in the long run," Energy Economics, Elsevier, vol. 91(C).
    4. Viral V. Acharya & Ramin P. Baghai & Krishnamurthy V. Subramanian, 2013. "Labor Laws and Innovation," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 997-1037.
    5. Kathleen McKiernan, 2021. "Social Security Reform in the Presence of Informality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 40, pages 228-251, April.
    6. Martin Feldstein & Elena Ranguelova, 2001. "Individual Risk in an Investment-Based Social Security System," American Economic Review, American Economic Association, vol. 91(4), pages 1116-1125, September.
    7. Dutta, Anwesha & Fischer, Harry W., 2021. "The local governance of COVID-19: Disease prevention and social security in rural India," World Development, Elsevier, vol. 138(C).
    8. Jiang, Jiaoliang & Chen, Yulin, 2021. "How does labor protection influence corporate risk-taking? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    9. Li, Kun & Li, Xiaokai, 2024. "How does Employee Education Affect Employer's Corporate Social Responsibility? Evidence from China," Economics Letters, Elsevier, vol. 234(C).
    10. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June.
    11. Li, Xun & Hui, Eddie Chi-man & Lang, Wei & Zheng, Shali & Qin, Xiaozhen, 2020. "Transition from factor-driven to innovation-driven urbanization in China: A study of manufacturing industry automation in Dongguan City," China Economic Review, Elsevier, vol. 59(C).
    12. Gilles Saint-Paul, 2002. "The Political Economy of Employment Protection," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 672-701, June.
    13. Liu, Guanchun & Liu, Yuanyuan & Zhang, Chengsi & Zhu, Yueteng, 2021. "Social insurance law and corporate financing decisions in China," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 816-837.
    14. Poschke, Markus, 2009. "Employment protection, firm selection, and growth," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1074-1085, November.
    15. Kaganovich, Michael & Zilcha, Itzhak, 1999. "Education, social security, and growth," Journal of Public Economics, Elsevier, vol. 71(2), pages 289-309, February.
    16. Coronado Julia Lynn & Fullerton Don & Glass Thomas, 2011. "The Progressivity of Social Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-45, November.
    17. Deng, Lixing & Lai, Shaojie & Liu, Shiang & Pu, Xiaoling, 2022. "Social insurance premiums and corporate cash holdings: Evidence from social insurance law in China," Economic Modelling, Elsevier, vol. 114(C).
    18. Cui, Chenyu & John, Kose & Pang, Jiaren & Wu, Haibin, 2018. "Employment protection and corporate cash holdings: Evidence from China's labor contract law," Journal of Banking & Finance, Elsevier, vol. 92(C), pages 182-194.
    19. Liu, Haiming & Chiang, Yao-Min, 2024. "Employment protection and environmental corporate social responsibility: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 92(C).
    20. Gonzalez-Eiras, Marti­n & Niepelt, Dirk, 2008. "The future of social security," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 197-218, March.
    21. Karl Aiginger & Dani Rodrik, 2020. "Rebirth of Industrial Policy and an Agenda for the Twenty-First Century," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 189-207, June.
    22. Wang, Mei & Xu, Mi & Ma, Shaojun, 2021. "The effect of the spatial heterogeneity of human capital structure on regional green total factor productivity," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 427-441.
    23. Minh Quang Dao, 2013. "Factor endowment, human capital, and inequality in developing countries," Journal of Economic Studies, Emerald Group Publishing, vol. 40(1), pages 98-106, January.
    24. Trevor A. Reeve, 2006. "Factor Endowments and Industrial Structure," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 30-53, February.
    25. Chen, Zhibin & Xu, Yibin & Tian, Zongtao & Meng, Xu, 2022. "The Impact of Social Insurance Law on Corporate Innovation: Evidence from a quasi-natural experiment," Economic Modelling, Elsevier, vol. 111(C).
    26. Dessaint, Olivier & Golubov, Andrey & Volpin, Paolo, 2017. "Employment protection and takeovers," Journal of Financial Economics, Elsevier, vol. 125(2), pages 369-388.
    27. Francis, Bill B. & Kim, Incheol & Wang, Bin & Zhang, Zhengyi, 2018. "Labor law and innovation revisited," Journal of Banking & Finance, Elsevier, vol. 94(C), pages 1-15.
    28. Minh Quang Dao, 2013. "Factor endowment, human capital, and inequality in developing countries," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(1), pages 98-106, January.
    29. Gillman, Max, 2021. "Steps in industrial development through human capital deepening," Economic Modelling, Elsevier, vol. 99(C).
    30. Chen, Yenn-Ru & Ho, Keng-Yu & Yeh, Chia-Wei, 2020. "CEO overconfidence and corporate cash holdings," Journal of Corporate Finance, Elsevier, vol. 62(C).
    31. Moroney, J R, 1970. "Factor Prices, Factor Proportions, and Regional Factor Endowments," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 158-164, Jan.-Feb..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Deng, Lixing & Lai, Shaojie & Liu, Shiang & Pu, Xiaoling, 2022. "Social insurance premiums and corporate cash holdings: Evidence from social insurance law in China," Economic Modelling, Elsevier, vol. 114(C).
    2. Karpuz, Ahmet & Kim, Kirak & Ozkan, Neslihan, 2020. "Employment protection laws and corporate cash holdings," Journal of Banking & Finance, Elsevier, vol. 111(C).
    3. Dang, Viet A. & De Cesari, Amedeo & Phan, Hieu V., 2021. "Employment protection and share repurchases: Evidence from wrongful discharge laws," Journal of Corporate Finance, Elsevier, vol. 69(C).
    4. Bai, Min & Ho, Ly & Lu, Yue & Qin, Yafeng, 2023. "Labor protection and dynamic leverage adjustments in the OECD countries," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 502-527.
    5. Xiao, Renrui & Xu, Pingguo & Huang, Baocong, 2024. "Tax incentives and firm social insurance contributions: Evidence from China," China Economic Review, Elsevier, vol. 86(C).
    6. Shangguan, Yiwen & Feng, Qiyangfan, 2024. "Environmental bonuses of employment protection: Evidence from labor contract law in China," Energy Economics, Elsevier, vol. 129(C).
    7. Jin, Gang & Zhang, Jiwen & Ye, Yongwei & Yao, Shiqi & Song, Jingxiang, 2024. "Social insurance law and firm markup in China," Economic Modelling, Elsevier, vol. 132(C).
    8. Bottasso, Anna & Conti, Maurizio & Sulis, Giovanni, 2017. "Firm dynamics and employment protection: Evidence from sectoral data," Labour Economics, Elsevier, vol. 48(C), pages 35-53.
    9. Che, Yi & Li, Xuchao & Zhang, Yan & Zhao, Lin, 2024. "Labor protection and firms’ risk-taking behavior: evidence from China’s New Labor Contract Law," Journal of Asian Economics, Elsevier, vol. 91(C).
    10. Li, Guangzhong & Wu, Cen & Zheng, Ying, 2020. "Employee protection and the tax sensitivity of wages: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 66(C).
    11. Wang, Qing Sophie & Chen, Lihan & Lai, Shaojie & Anderson, Hamish D., 2024. "Judicial reform and corporate cash holdings: Evidence from the establishment of circuit courts in China," Journal of Behavioral and Experimental Finance, Elsevier, vol. 43(C).
    12. Liu, Haiming & Chiang, Yao-Min, 2024. "Employment protection and environmental corporate social responsibility: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 92(C).
    13. Yu, Jingyuan & Zhao, Heyun & Mo, Longjiong, 2023. "Can social insurance contributions boost labor share?—Evidence from China’s social insurance law," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 701-715.
    14. Gao, Yihong & Gao, Jiayan, 2023. "Employee protection and trade credit: Learning from China's social insurance law," Economic Modelling, Elsevier, vol. 127(C).
    15. Geran Tian & Weixing Wu, 2022. "Employment protection, production flexibility and corporate capital spending," Australian Economic Papers, Wiley Blackwell, vol. 61(1), pages 1-23, March.
    16. Cui, Yadong & Liang, Jun & Wang, Wei, 2025. "Social insurance contributions and labor income share—Evidence from China's Social Insurance Law," Socio-Economic Planning Sciences, Elsevier, vol. 97(C).
    17. Cerpentier, Maarten & Schulze, Anja & Vanacker, Tom & Zahra, Shaker A., 2024. "Employment protection laws and the commercialization of new products: A cross-country study," Research Policy, Elsevier, vol. 53(7).
    18. Lai, Shaojie & Luo, Zixuan & Wang, Qing Sophie & Pu, Xiaoling, 2024. "Empowered minority shareholders and corporate cash dynamics: Empirical evidence from China's online voting reform," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 354-373.
    19. Zhu, Yafang & Guo, Yuanyuan, 2024. "How does implementing the social insurance law affect enterprises' investment preferences?," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    20. Huang, Yuhong & Gao, Yajia, 2023. "Labor protection and the digital transformation of enterprises: Empirical evidence from China's social insurance law," Finance Research Letters, Elsevier, vol. 57(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:1596-1607. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.