The employment and wage effects of export VAT rebates: evidence from China

Bo Gao (), Jing Ma and Zheng Wang
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Bo Gao: School of Business and Economics, Loughborough University
Jing Ma: De Montfort University
Zheng Wang: De Montfort University

Review of World Economics (Weltwirtschaftliches Archiv), 2021, vol. 157, issue 2, No 5, 347-373

Abstract: Abstract This paper studies the employment and wage effects of VAT rebates to exporters with comprehensive firm-product-level data of China. It is found that the adjustments in VAT rebates significantly and positively affect firm’s employment but have no statistically significant effect on firm’s wage. Moreover, this paper finds that the employment effect of VAT rebates is heterogeneous across firms. In particular, low-productivity firms are more sensitive to the adjustments of VAT rebates than high-productivity firms, suggesting that an increase of VAT rebates may cause mis-reallocation of resources.

Keywords: VAT rebates; Employment; Wage; Firm heterogeneity; Trade policy (search for similar items in EconPapers)
JEL-codes: F14 F16 H32 J23 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10290-020-00400-3

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