Can government investment expansion benefit everyone: a study with state-owned enterprises in the Chinese context

Ling Dai, Zuomin Zhang and Likui Lin

Applied Economics, 2023, vol. 55, issue 15, 1663-1681

Abstract: The main difference between China and other major economies is the presence of a large number of state-owned enterprises. Focusing on the Chinese context, we divide firms into state-owned and private enterprises, and households into working and capitalist class; thereafter, we simulate the effects of government investment expansion on income distribution under different financing instruments. We found that when financed by corporate income tax or value-added tax, government investment expansion makes the working class in both types of enterprises better off, but the capitalist class worse off; however, when financed by labour income tax, government investment expansion yields the opposite result. When the expansion is financed by government debt, the real wealth of the working class in state-owned enterprises and the capitalist class increases, but that of the working class in private enterprises decreases. The difference in income distribution outcomes between the working class and capitalist class is due to the differing composition of their wealth, and the difference in income distribution outcomes among working class is because the enterprises for which they work perform differently in undertaking government investment projects and obtaining loans from the financial market.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2022.2099518 (text/html)
Access to full text is restricted to subscribers.

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:taf:applec:v:55:y:2023:i:15:p:1663-1681

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2022.2099518

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().