Medical Insurance Contribution and Firm-Level Total Factor Productivity

Huang Tao (), Sun Rui () and Zhao Zhe ()
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Huang Tao: Faculty of Economics, School of Finance and Trade, 12440 Liaoning University , Shenyang, China
Sun Rui: Faculty of Economics, School of Finance and Trade, 12440 Liaoning University , Shenyang, China
Zhao Zhe: Faculty of Economics, School of Economics, 12440 Liaoning University , Shenyang, China

Asia-Pacific Journal of Risk and Insurance, 2025, vol. 19, issue 1, 27-51

Abstract: This paper investigates the relation between medical insurance contribution and firm-level total factor productivity in China. Using a sample of Chinese A-share companies from 2007 to 2022, we find robust evidence that firms exhibit lower total factor productivity when medical insurance contribution is increasing. Specifically, we also show that this negative effect is more profound for state-owned enterprises, enterprises with lower employee compensation, and labor-intensive enterprises. Meanwhile, our findings remain valid after a series of robustness tests and controlling for endogeneity. Finally, we propose that the decreasing employees’ disposable income is plausible channel through which medical insurance contribution discourages firm-level total factor productivity in China. Overall, these results shed light on the real effects of medical insurance contribution and the determinants of firm-level total factor productivity.

Keywords: medical insurance; total factor productivity; disposable income (search for similar items in EconPapers)
JEL-codes: D24 I18 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/apjri-2024-0019

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