Is Supplementary Pension Beneficial to Human Capital Investment? Evidence from China

Yalin Gong, Li Lai, Kam C. Chan and Xiaolan Xia

Emerging Markets Finance and Trade, 2022, vol. 58, issue 3, 739-753

Abstract: We examine the impact of a supplementary pension insurance program (SPIP) and short-term compensation on firm-level human capital investment using a sample of Chinese firms from 2007 to 2018. The findings suggest that both SPIP and short-term compensation have positive effects on human capital investment, and the magnitude of SPIP is stronger than that of short-term compensation. Further analysis suggests that the impact of SPIP on human capital investment in a firm is magnified when the firm has high-quality employees. Our findings are robust after accounting for potential endogeneity concerns. When compared with short-term compensation, SPIPs contribute more to establishing a long-term relationship between a firm and its employees, which stimulates human capital investment.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:58:y:2022:i:3:p:739-753

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DOI: 10.1080/1540496X.2020.1843426

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