In recent years,the urban newly increased employment in China has continued to grow,but the economic growth rate has continued to slow down,showing obvious inconsistency.This study explains this phenomenon from the perspective of Commercial System Reform.Enterprises are the micro-foundation of employment.However,before 2012,it was not easy for Chinese enterprises to legally enter the market.According to the World Bank Doing Business Report,enterprises must pay at least 38 days and US$149,which is an institutional cost that new entrants must pay.At this time,it only took 0.5 days to start a business in New Zealand,which is the global frontier practice.It is undeniable that for entrepreneurs with high capabilities who plan to set up large enterprises,this is not the main cost that affects the decision-making of enterprise entry,but it is an obstacle for small and private enterprises to enter the market.Those who cannot pay this institutional cost cannot legally enter the market.In 2012,the Commercial System Reform began to be partially piloted and the cost of market access was continuously reduced.By 2018,it only took 8.6 days and US$35 to register a company,which was 1/4 of the cost before the reform.This means that with the reduction of institutional costs,small and private enterprises that were previously unable to enter the market can now legally enter the market,and the number of enterprises will increase accordingly.We call these small and private enterprises"marginal firms."When the reform continues to advance and institutional costs continue to decrease,marginal firms can continuously enter the market and directly create new job opportunities.However,these marginal firms are small in scale with high exit rates;thus,their contribution to economic growth is relatively limited.We model this logic theoretically.The model indicates that the effect of Commercial System Reform on employment growth comprises two aspects—the"quantity effect"and the"scale effect."The quantity effect refers to the increasing number of small businesses founded because of the lowered institutional costs,and the scale effect refers to the decreased size of marginal firms entering the market.This study empirically verifies the above theoretical inference.Based on panel data on 238 cities from 2005 to 2017 and field survey data of 4,160 companies across the country in 2018,this study empirically obtained four main findings.First,in terms of quantity,the implementation of the Commercial System Reform significantly increased the employment growth rate of the urban private sector by 3.5 percentage points,while the employment growth rate of the nonprivate sector did not change significantly.Second,in terms of structure,the implementation of Commercial System Reform has increased the proportion of small enterprises among new enterprises by about 22 percentage points;the proportion of private enterprises has increased by about 13 percentage points;and the average size of new enterprises has dropped by about half.Third,in terms of mechanism,the Commercial System Reform has significantly reduced the institutional costs for enterprises to deal with the government,e.g.,the number of times an enterprise has to go to the government for administrative approval has been reduced by two times.Fourth,the reform has significantly increased the exit rate of enterprises by 0.2 percentage points.Therefore,this study theoretically and empirically verifies that marginal firms such as small and private enterprises entered the market after the reform and directly created new jobs.This is why urban newly increased employment continued to hit record highs from 2012 to 2018.However,these marginal firms are smaller in scale and more likely to exit the market when faced with negative shocks.Therefore,their role in promoting economic growth is relatively limited in the short term,thus unable to reverse the slowdown in economic growth.
EmploymentCommercial System ReformMarginal FirmsInstitutional Cost
NETL
NSTL
万方数据
维普
