How Does the Decline of Social Security Contribution Rate Affect Firm’s Social Security Participation and Labor Demand?
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| Title | How Does the Decline of Social Security Contribution Rate Affect Firm’s Social Security Participation and Labor Demand?
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| Author | Song Hong,Feng Jin and Yang Wanyu |
| Organization | Fudan University; Dongbei University of Finance and Economics |
| Email | songhong@fudan.edu.cn；jfeng@fudan.edu.cn；wanyu.yang@dufe.edu.cn |
| Key Words | reduction in social security payment rate; social security participation; labor demand, employment |
| Abstract | the reduction of social security payment rate has become an important measure to stimulate the activities of small and medium-sized enterprises and promote the sustainable development of the economy in China. The systematic evaluation of the impact of the reduction of social security payment rate on the behavior of enterprises is helpful to further optimize the policy of social security payment rate. This paper investigate the effect of social security fee reduction on social security payment and labor employment. In particular, we focus on the reduction of social security payment rate in 2012 of Zhejiang province, and use difference-in-difference strategy to deal with the endogeneity problem. We have several findings: first, the decrease of endowment insurance contribution rate significantly improves the social security participation rate of enterprises and the total social security payment expenditure of enterprises, which means that the policy of reducing social security contribution rate achieves a win-win situation of increasing the participation rate of enterprises and maintaining the balance of social security fund. Second, we find that the reduction in payment rate significantly improves the labor demand of enterprises, and this effect is especially obvious for small and medium-sized private enterprises. The study of this paper is helpful for the in-depth understanding of the economic and social effects of the social security contribution rate reduction policy implemented nationwide since 2019 May. |
| Serial Number | WP1443 |
| Time | 2019-12-04 |
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