Can government green subsidies improve corporate labor income share?

Chunyang Zhang and Xin Liu

International Review of Financial Analysis, 2025, vol. 104, issue PA

Abstract: Since its economic reforms in the late 20th century, China has experienced rapid economic growth and achieved its goal of becoming a moderately prosperous society by 2020. However, challenges such as significant income inequality and inefficient income distribution mechanisms remain. This study empirically examines the impact of government green subsidies on the labor income share among firms listed on China's A-share market. Findings indicate that government green subsidies significantly increase firms' labor income share, and robustness tests validate these results. Moreover, heterogeneity analyses reveal that the positive effect of green subsidies is more pronounced for nonstate-owned enterprises, the manufacturing sector, and firms facing higher financial constraints.

Keywords: Green subsidies; Labor income share; Employee satisfaction (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925004272

DOI: 10.1016/j.irfa.2025.104340

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