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The Impact of Social Insurance Law on Corporate Innovation: Evidence from a quasi-natural experiment

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  • Chen, Zhibin
  • Xu, Yibin
  • Tian, Zongtao
  • Meng, Xu

Abstract

The implementation of China's Social Insurance Law initiated changes in the management and collection of social insurance premiums. The effect of this collection related to labor cost and employee welfare on innovation remains unexplored. We use a difference-in-differences model based on unique data in China and reveal that social insurance premiums collection following the implementation of Social Insurance Law appears to significantly contribute to innovation. Both labor cost and employee welfare effects are inducement mechanisms. Additional tests suggest that the relationship between Social Insurance Law and innovation is more pronounced for state-owned enterprises, firms with a superior legal environment, and firms in more competitive industries. The above findings offer new insights into the real impact of the social insurance system reform on advancing China's economic development and suggest strategies to drive innovation through the implementation of the Social Insurance Law.

Suggested Citation

  • Chen, Zhibin & Xu, Yibin & Tian, Zongtao & Meng, Xu, 2022. "The Impact of Social Insurance Law on Corporate Innovation: Evidence from a quasi-natural experiment," Economic Modelling, Elsevier, vol. 111(C).
    • Handle: RePEc:eee:ecmode:v:111:y:2022:i:c:s0264999322000761
    DOI: 10.1016/j.econmod.2022.105830
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    More about this item

    Keywords

    Social insurance premium; Corporate innovation; Labor cost; Employee motivation;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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