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Corporate income tax reform and intra-industry resource reallocation

Author

Listed:
  • Jin Chen
  • Meimei Li
  • Churen Sun
  • Yao Xiong

Abstract

Taxation is a crucial tool for government economic regulation and resource allocation. Our study, using data from the Chinese Industrial Enterprise Database from 1998 to 2010, highlights the significant role of corporate income tax reform in reducing resource misallocation in the industry. Employing the robust Difference-in-Differences method, we empirically confirm this effect. Our mechanism analysis reveals that the reform promotes increased competition among industry firms, resulting in enhanced resource allocation efficiency. These findings emphasize the vital role of tax policy in shaping resource allocation dynamics in Chinese market, underscoring its broader economic significance.

Suggested Citation

  • Jin Chen & Meimei Li & Churen Sun & Yao Xiong, 2026. "Corporate income tax reform and intra-industry resource reallocation," Applied Economics Letters, Taylor & Francis Journals, vol. 33(2), pages 260-265, January.
    • Handle: RePEc:taf:apeclt:v:33:y:2026:i:2:p:260-265
    DOI: 10.1080/13504851.2024.2364017
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