| Abstract | As the most important kind of insurance in China, pension fee takes a large part of employee wage, and it also brings firms a heavy burden. Whether pension burden can hinder firms’ productivity is still unobvious in literature. Using the unique data obtained from the detailed disclosure of listed corporation’s annual report footnotes, we construct a measurement of “effective pension rate” and show that it reduces the firm’s productivity. Further, this negative relationship is only held in low average wage sample group. We use the different trend of firm contribution proportions for its employees in different regions to identify the impact and find the same results. In addition, we find that high pension rate increase firm’s labor cost proportion in total sales and decrease the employees’ deposable income in current period at the same time. Meanwhile, high pension burden does not lead firm to update the growth mode through innovation. Overall, our result is important to the on-going pension system reform. |