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Beyond jobs and wages: The hidden cost of automation on corporate social security contributions

Author

Listed:
  • Wang, Linlin
  • Liu, Chun
  • Liu, Ding
  • Zhang, Yi

Abstract

The rise of industrial robots has profoundly transformed the labor market, yet its impact on employee welfare, particularly corporate social security contributions, remains underexplored. Using nationally representative tax survey data from Chinese manufacturing firms, this study examines how automation reshapes corporate obligations regarding employee welfare. Employing a local labor market framework, we find that increased city-level robot exposure significantly reduces both the participation rate and the value of corporate social security contributions. These reductions are more pronounced among small-scale and private firms, and in labor-intensive as well as non-high-tech industries. While industrial robots boost productivity, they also displace human labor, thereby diminishing workers' bargaining power and suppressing both employment and wages, which in turn lowers firms' social security contributions. Our findings highlight the need for targeted policy interventions to address the negative employee welfare outcomes of automation, with particular attention to at-risk worker groups.

Suggested Citation

  • Wang, Linlin & Liu, Chun & Liu, Ding & Zhang, Yi, 2025. "Beyond jobs and wages: The hidden cost of automation on corporate social security contributions," International Review of Financial Analysis, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finana:v:106:y:2025:i:c:s1057521925006039
    DOI: 10.1016/j.irfa.2025.104516
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    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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