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The employment and wage effects of export VAT rebates: evidence from China

Author

Listed:
  • Bo Gao

    (School of Business and Economics, Loughborough University)

  • Jing Ma

    (De Montfort University)

  • Zheng Wang

    (De Montfort University)

Abstract

This paper studies the employment and wage effects of VAT rebates to exporters with comprehensive firm-product-level data of China. It is found that the adjustments in VAT rebates significantly and positively affect firm’s employment but have no statistically significant effect on firm’s wage. Moreover, this paper finds that the employment effect of VAT rebates is heterogeneous across firms. In particular, low-productivity firms are more sensitive to the adjustments of VAT rebates than high-productivity firms, suggesting that an increase of VAT rebates may cause mis-reallocation of resources.

Suggested Citation

  • Bo Gao & Jing Ma & Zheng Wang, 2021. "The employment and wage effects of export VAT rebates: evidence from China," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(2), pages 347-373, May.
  • Handle: RePEc:spr:weltar:v:157:y:2021:i:2:d:10.1007_s10290-020-00400-3
    DOI: 10.1007/s10290-020-00400-3
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    More about this item

    Keywords

    VAT rebates; Employment; Wage; Firm heterogeneity; Trade policy;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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