Promoting Employment and Stabilizing Growth:A Perspective of Pension Insurance Contribution Rates in China
In comparison to most OECD countries,China shows a high corporate social security contribution rate.In fact,the revenue generated from China's basic pension insurance fund for urban employees in 2022 amounted to approximately CNY 6.3 trillion.Consequently,social security contributions have become a significant operating cost for companies.To reduce this burden and achieve a coordinated national basic pension insurance system,China implemented a social security contribution policy reform in 2019,which lowered and unified the national basic pension insurance contribution ratio to 16％.This paper empirically measures and decomposes the macro employment and output effects of the policy of contribution rate reduction based on a quasi-natural experiment of pension contribution rate reduction in China in 2019,using national tax survey data from 2016 to 2020.The theoretical analysis highlights the incentive and allocation effects of this policy as two important mechanisms that promote macro employment and output growth.The empirical analysis finds that the policy led to macro employment growth of approximately 5.1％and macro output growth of approximately 11.4％in 2019.Moreover,the results suggest that the macro employment and output growth mainly originated from the allocation effect.Based on micro-level evidence,the policy has been found to significantly reduce firms'actual social security contribution rates and labor costs.This reduction has also increased employee wages and facilitated the expansion of firms'employment and output sizes.Additionally,the macroeconomic effects of the contribution rate reduction are heterogeneous across industries and regions.Both incentive and allocation effects are significant in the manufacturing sector and the central and eastern regions.Furthermore,the contribution rate reduction has significantly improved resource allocation efficiency and contributed to a macro total factor productivity(TFP)increase of approximately 2.4％.However,the TFP increase is mainly driven by the improvement in resource allocation efficiency within region-industries.The contributions of this paper lie in three respects.Firstly,most of the existing literature that evaluates the economic effects of the social security contribution reform relies on reduced-form regression,and the impact of the reform is evaluated directly using the policy treatment effects estimated by the regression equation.Moreover,most of the existing literature that measures the loss of resource allocation efficiency is based on structural models that use parameter calibration and counterfactual analysis to calculate TFP loss caused by resource misallocation.This paper combines the reduced-form regression and structural models to measure the macroeconomic effects of the reform,including employment,output,and resource allocation efficiency,using policy treatment effects,which is methodologically innovative.Secondly,the existing literature primarily focuses on the microeconomic effects of the social security contribution reform and analyzes the behaviors of individual firms.However,such research tends to overlook the allocation effects that may arise from the reduction in contribution rates.This paper demonstrates that these allocation effects are essential for promoting macro-level employment,output,and TFP growth.Thus,this study presents a unique perspective on the topic.Thirdly,China's Comprehensive Plan to Reduce Social Insurance Premium Rates implemented in 2019 is a crucial component of the government's efforts to reduce taxes and fees and deepen the reform of the social security system.However,due to data limitations,there has been little research on the policy's economic effects.This paper addresses this gap by examining theimpact and mechanisms of the 2019 policy of reducing social security contribution rates on macro-level employment,output,and resource allocation efficiency,using micro firm data.As a result,this paper provides a comprehensive and in-depth assessment of the reform in 2019.The findings of this study have both theoretical and policy implications.
Social Security Contribution RateEmploymentEconomic GrowthResource Misallocation
万方数据
维普
