For a long time, most enterprises in China’s market are facing a greater withdrawal risk, and their average life span is relatively short. The impact of the social security payment burden on the survival risk of enterprises has been a hot topic of social concern. Based on the theoretical analysis, this paper examines the impact of the social security payment burden on the survival risk of Chinese enterprises and its mechanism by using the method of propensity score matching and Cox proportional hazard model. The results show that under the condition of other factors unchanged, the increase in the social security payment burden will have a " U”-type effect on the market exit risk rate of enterprises, which will be reduced first and then increased. This is due to the combined effect of social security contributions on the scale of labor investment in enterprises and the promotion effect on labor output. Specifically, in the low-burden stage, improving the level of social security contribution will help to promote the efficiency of labor output and reduce the risk of withdrawal; but when the social security burden of enterprises exceeds the optimal rate, if we continue to increase the social security burden, it will restrain the investment of enterprises in labor force, which will lead to the increase of the risk of withdrawal of enterprises. The optimal social security contribution rate (calculated by " total corporate social security contributions/total wages payable”) is about 20.28% on average. Different types of enterprises have different tolerance to the social security burden. On average, small and medium-sized enterprises are less able to bear the social security burden than large enterprises; new enterprises are less able to bear the social security burden than long-term enterprises. Based on these findings, this paper argues that it is necessary to reduce the statutory social security premium rate of enterprises in China, because the statutory social security premium rate of enterprises in most regions is more than 25%. But at the same time, the implementation of the social security policy needs to be strengthened, because many enterprises in China have not paid social security fees in full, and the average actual social security premium rate is far lower than the statutory rate. In addition, this paper also puts forward other policy suggestions to help to reduce the survival risk of enterprises.
A Research on the Impact of the Social Security Payment Burden on the Survival Risk of Chinese Enterprises
Journal of Finance and Economics Vol. 45, Issue 08, pp. 112 - 126 (2019) DOI:10.16538/j.cnki.jfe.2019.08.008
［1］Bai C E, Wu B Z, Jin H. Effect of the old-age insurance contribution on consumption and saving[J]. Social Sciences in China, 2012, (8): 48-71. (In Chinese)
［2］Bao Z K. Innovative behavior and survival risk of Chinese enterprises: An empirical research[J]. Finance and Trade Economics, 2016, (2): 85-99. (In Chinese)
［3］Cheng X, Deng D S. Is enterprise social security input a cost or investment? A new finding based on “China employer-employee survey”[J]. Population and Economics, 2018, (5): 113-126. (In Chinese)
［4］Feng J. The incentive of participation in urban social insurance system in China: A study based on manufacturing firms[J]. Economic Research Journal, 2013, (7): 104-117. (In Chinese)
［5］Ge J G. Shifting effect of social insurance contribution on wages and employment: Based on the analysis of industry features and business cycle[J]. Public Finance Research, 2018, (8): 93-104. (In Chinese)
［6］He J F, Zhang X J. The influence of rising labor cost on enterprise innovation[J]. The Journal of Quantitative and Technical Economics, 2018, (8): 56-73. (In Chinese)
［7］Kang C K, Chu T S. Population aging and optimal pension payment Rate[J]. The Journal of World Economy, 2014, (4): 139-160. (In Chinese)
［8］Lin W. Enterprise innovation incentive: An explanation from the rising labor cost in China[J]. Management World, 2013, (10): 95-105. (In Chinese)
［9］Lin Z F. A positive analysis on the interaction of social security policy and employment[J]. Finance and Trade Economics, 2005, (6): 55-60. (In Chinese)
［10］Liu G. The Determination of social insurance contribution: A theoretical and empirical analysis[J]. Journal of Finance and Economics, 2004, (2): 73-79. (In Chinese)
［11］Liu L L, Mu X Y. The growing-out effect of corporate social security contribution on labor employment: Based on the empirical analysis of manufacturing listed company data in China[J]. Insurance Studies, 2015, (10): 107-118. (In Chinese)
［12］Ma S, Meng X R, Gan L. Effect of pension on employment and firm average wage[J]. China Economic Quarterly, 2014, (3): 969-1000. (In Chinese)
［13］Mao Q L, Sheng B. Efficiency of resource allocation and manufacturing total factor productivity in China[J]. Economic Research Journal, 2013, (4): 16-29. (In Chinese)
［14］Shen G J, Chen B K, Yang R D. Can tax-reduction boost economy in China? An empirical study based on China’s value-added tax reform[J]. Economic Research Journal, 2016, (11): 70-82. (In Chinese)
［15］Shen Y J, Fan C L, Chen D H, Liu J. Explicit contract, employee rights protection and the rise in the labor cost: Exploring the role of the labor contract law[J]. China Industrial Economics, 2017, (2): 117-135. (In Chinese)
［16］Shi Y P, He A D, Chen Y W. The protection of property right and the duration of firms: Evidences from manufacturing industries[J]. Management World, 2013, (8): 118-125. (In Chinese)
［17］Su Z X. Rate of basic pension: International comparison, challenges and prospects[J]. Journal of Renmin University of China, 2016, (1): 20-27. (In Chinese)
［18］Sun Y N, Bian S, Mu H Z. On optimum payment of endowment insurance according to industry income differences in China[J]. Population and Economics, 2009, (5): 91-96. (In Chinese)
［19］Wang L. Labor cost, employment protection and firm technological innovation[J]. Chinese Journal of Population Science, 2017, (1): 71-80. (In Chinese)
［20］Wang R Q, Jin H, Yang C Y. Is China’s social insurance burden really high or false? Empirical analysis based on the actual payment of enterprises and workers[J]. Journal of Jiangxi University of Finance and Economics, 2017, (6): 53-63. (In Chinese)
［21］Yang C M. Tax cut and fees reduction: Achievement, problems and the reform path[J]. Finance and Trade Economics, 2017, (9): 5-17. (In Chinese)
［22］Yu J, Lu Y D, Liu H Y. Export behavior and enterprise survival probability: An empirical study[J]. The Journal of World Economy, 2015, (4): 25-49. (In Chinese)
［23］Zhao J, Mao J, Zhang L. Social security contribution rate, participation probability and contribution level: An empirical study on contribution evasion of employees and firms[J]. China Economic Quarterly, 2015, (1): 341-372. (In Chinese)
［24］Zheng B W. 60 Years of the social security in China: Achievements and lessons[J]. Chinese Journal of Population Science, 2009, (5): 2-18. (In Chinese)
［25］Zhu Y F, Yin F L, Wang F. Research on the multiple difficulties and policy suggestions for reducing the social insurance burden of enterprises: Taking Hebei province as an example[J]. Social Security Studies, 2016, (6): 49-54. (In Chinese)
［26］Acemoglu D. Technical change, inequality and the labor market[J]. Journal of Economic Literature, 2002, 40(1): 7-72.
［27］Boeri T, Boersch-Supan G, Tabellini G. Pension reforms and the opinions of European citizens[J]. The American Economic Review, 2002, 92(2): 396-401.
［28］Disney R, Haskel J, Heden Y. Entry, exit and establishment survival in UK manufacturing[J]. Journal of Industrial Economics, 2003, 51(1): 91-112.
［29］Esteve-Pérez S, Sanchis-Llopis A, Sanchis-Llopis J A. A competing risks analysis of firms’ exit[J]. Empirical Economics, 2010, 38(2): 281-304.
［30］Falck O. Survival chances of new businesses: Do regional conditions matter?[J]. Applied Economics, 2007, 39(16) : 2039-2048.
［31］Hicks J R. Annual survey of economic theory: The theory of monopoly[J]. Econometrica, 1935, 3(1): 1-20.
［32］Iturbe-Ormaetxe I. Salience of social security contributions and employment[J]. International Tax and Public Finance, 2015, 22(5): 741-759.
［33］Kleinknecht A. Is labour market flexibility harmful to innovation?[J]. Cambridge Journal of Economics, 1998, 22(3): 387-396.
［34］Lai Y J, Master S. The effects of mandatory maternity and pregnancy benefits on women’s wages and employment in Taiwan, 1984-1996[J]. ILR Review, 2005(58): 274-281.
［35］Mares I. Firms and the welfare state: When, why and how does social policy matter for employers?[A]. Hall P A, Soskice D. Varieties of capitalism: The institutional foundations of comparative advantage[C]. Oxford: Oxford University Press, 2001.
［36］Marquetti A. Do rising real wages increase the rate of labor-saving technical change? Some econometric evidence[J]. Metroeconomica, 2004, 55(4): 432-441.
［37］Nyland C, Smyth R, Zhu C J. What determines the extent to which employer will comply with their social security obligations? Evidence from Chinese firm-level data[J]. Social Policy and Administration, 2006, 40(2): 196-214.
［38］Ooghe E, Schokkaert E, Flechet J. The incidence of social security contributions: An empirical analysis[J]. Empirica, 2003, 31 (2): 81-106.
［39］Romer P M. Increasing returns and long-run growth[J]. Journal of Political Economy, 1986, 94(5): 1002-1037.
［40］Rosenbaum P R, Rubin D B. Constructing a control group using multivariate matched sampling methods that incorporate the propensity score[J]. The American Statistician, 1985, 39(1): 33-38.
［41］Staiger D, Stock J H. Instrumental variables regression with weak instruments[J]. Econometrica, 1997, 65 (3): 557-586.
［42］Summers L H. Some simple economics of mandated benefits[J]. The American Economic Review, 1989, 79(2): 177-183.
［43］Yang Q G, Temple P. Reform and competitive selection in China: An analysis of firm exits[J]. Structural Change and Economic Dynamics, 2012, 23(3): 286-299.
［44］Zhang J, Zhang J S. Optimal social security taxation in a dynastic model with investment externalities and endogenous fertility[J]. Journal of Economic Dynamics and Control, 2007, 31(11): 3545-3567.
Cite this article
Wei Tianbao, Ma Lei. A Research on the Impact of the Social Security Payment Burden on the Survival Risk of Chinese Enterprises[J]. Journal of Finance and Economics, 2019, 45(8): 112-126.
Previous: Cutting Overcapacity, Productivity and the Recovery of Chinese-style “Zombies”: Based on the Evidence of Chinese Industrial Enterprises