Local Economic Governance,Burden Reduction Incentives and Employment Promotion Effect:Evidence from the Pilot Policy of"Empowering Township Devolution"
A stable and efficient labor market is an important driving force for building China's modern economic system.In the face of multiple challenges such as slowing economic growth and a complex and volatile external environment,stimulating market vitality is imperative to stabilizing growth,promoting employment,and achieving economic governance.Under the prospect of promoting the modernization of national governance capacity,the county,as the cornerstone of grassroots government governance,is an important subject for stabilizing the overall employment goal.However,only a few studies have focused on the impact of the reform of the"county-township"grassroots fiscal system and the reform of the administrative management system.Based on the matched data of industrial enterprises and townships'location information,this study adopts the difference-in-differences model to assess the employment-promoting effect of the pilot policy of"Empowering Township Devolution"—a program that aims to empower grassroots government economic governance.The results reveal that grassroots government economic governance empowerment significantly enhances employment.The employment-boosting effect is particularly prominent among private and large firms,and there are significant synergistic governance effects in areas with higher levels of economic,fiscal,and financial decentralization,as well as trade openness at the county level.Mechanism analysis reveals that enhancing grassroots government economic governance significantly reduces enterprise tax costs,transaction costs,and financing costs;stimulates market vitality;and thus promotes employment.The contributions of this study are as follows.First,this study expands the theoretical perspective of employment promotion.While existing studies have discussed the role of fiscal and tax system reform in stimulating market vitality,this study reveals the employment promotion effect of the economic governance capacity of grassroots government,filling a gap in the theoretical research and providing micro-evidence in the field of economic governance.Second,it expands research on the economic effects of centralization and decentralization reforms.The international literature mainly focuses on the impact of fiscal and administrative power decentralization or centralization on regional economic growth and business decision-making behavior,while the Chinese literature mostly concentrates on the reform of fiscal and administrative management systems of governments at or above the county level,exploring the macroeconomic effects of decentralization and centralization reform in public services,environmental governance,and other aspects.This study contributes to the empirical research on decentralization-centralization reform by evaluating the employment promotion effect of"Empowering Township Devolution."Finally,this study reveals the employment promotion effect of grassroots government economic governance from the perspective of burden reduction incentives.Some studies have demonstrated the promotion effect of tax reduction based on income tax reduction and exemption,while others explored the impact of reducing institutional transaction costs or examined the impact of financing support policies.This study incorporates tax costs,transaction costs,and financing costs into a unified analytical framework,enriching the institutional driving mechanism for stimulating market vitality.
Local Economic GovernanceBurden Reduction IncentivesEmployment ScaleEmpowering Township DevolutionMarket Vitality
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