Judicial System Reform and Corporate Employment in China: Evidence from the Establishment of Circuit Courts

Pengcheng Jiang and Huan Jin

China & World Economy, 2025, vol. 33, issue 6, 29-57

Abstract: This study employed a difference‐in‐differences model to examine whether judicial reform could affect corporate employment, using the establishment of China's circuit courts in 2015 as a quasi‐natural experiment. It found that the reform of the judicial system enhanced corporate employment significantly. The effects were stronger in enterprises with limited external financing and those situated in provinces with high levels of administrative intervention. Mechanism analysis suggested that the reform encouraged firms to pursue litigation more actively, reducing local judicial protectionism. It also promoted employment by easing financing constraints, expanding firm output, and improving productivity. A cost–benefit analysis showed that the circuit courts were highly efficient in promoting employment. Further analysis found that local state‐owned enterprises tended to increase labor input by cutting wages and capital investment whereas private firms raised capital investment to facilitate capital deepening.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/cwe.70000

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:chinae:v:33:y:2025:i:6:p:29-57

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1671-2234

Access Statistics for this article

China & World Economy is currently edited by Yongding Yu

More articles in China & World Economy from Institute of World Economics and Politics, Chinese Academy of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().