How does social security contribution affect enterprise performance: A perpective based on new structural economics

Haining Yan, Zijin Wang, Changjiang Shu and Liou Jennhae

Economic Analysis and Policy, 2024, vol. 84, issue C, 1596-1607

Abstract: This paper empirically analyzes the impact of social security contributions on firm performance using data from China's Shanghai and Shenzhen A-share listed companies from 2010 to 2022. The findings show that social security contributions have an inverted U-shaped relationship with firm performance, which is due to the fact that the human capital effect of social security contributions is greater than the crowding-out effect before the optimal point, and the crowding-out effect is greater than the human capital effect after the optimal point is reached. The above conclusion still holds after a series of robustness tests. In addition, this paper constructs the optimal social security contribution rate for enterprise performance from the relevant theory of factor endowment change in new structural economics, and at the same time finds that deviation from the optimal social security contribution rate reduces enterprise performance. This paper analyzes the heterogeneous roles played by both the social security contribution rate and the optimal social security contribution rate, and it can be found that these results vary across firms with different property rights and factor intensities. The findings of this paper provide policy considerations for setting the optimal social security contribution rate.

Keywords: Social security contribution; Firm performance; New structural economics (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:84:y:2024:i:c:p:1596-1607

DOI: 10.1016/j.eap.2024.10.035

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