Investment incentives and the relative demand for skilled labor: Evidence from accelerated depreciation policies in China

This study evaluates the effects of China's 2014 and 2015 accelerated depreciation policies on the relative demand of firms for skilled labor. We develop a simple model to explore how the policies affect the relative demand of firms for skilled labor and illustrate the roles of financing constraints and tax compliance in mediating the policy effects. We then employ a firm-level dataset from China's A-share listed companies and use a quasi-experimental design to examine the model predictions. We find that the policies significantly increase the relative demand of firms for skilled labor. The channels underlying the policy effects are that the policies generate additional cash flow for firms, stimulate investment and, thus, raise the demand of firms for skilled labor with the presence of capital–skill complementarity. We also find that the positive effects of the policies on the relative demand for skilled labor are primarily significant for firms with strong financing constraints and high tax compliance. Moreover, we document the positive effects of the policies on R&D investment, firm value added, productivity, workers' benefits, and corporate social responsibility performance, which further corroborate our main results.     

The value-added tax reform and labor market outcomes: Firm-level evidence from China

The tax incentives designed to stimulate firm investment may have a large and unexpected impact on labor market outcomes. Using a comprehensive data set on Chinese manufacturing firms during the period 1998–2007 with a difference-in-differences approach, we examine the impact of the value-added tax reform in 2004 on the firm-level labor market outcomes. We find that firms in eligible industries and pilot regions (treated firms) enjoying lower costs of purchasing fixed assets under the reform tended to increase capital investment and reduce employment simultaneously relative to firms that did not have tax incentives (the control firms). Compared with the control firms, the treated firms became more capital intensive but had declines in labor share in value added and average wage. We also find that the employment adjustment is associated with increase in the share of skilled workers in terms of engineers and technicians, but not workers with a college degree or higher.     

Tax enforcement and corporate employment: Evidence from a quasi-natural experiment in China

This study investigates how tax enforcement affects corporate employment in China. We utilize the merger of the State Tax Bureau and Local Tax Bureaus as a quasi-natural experiment and adopt a difference-in-differences framework to identify causality. The results show that tougher tax enforcement has a significant and negative effect on corporate employment and that this effect is more pronounced for firms with higher labor intensity, greater financial constraints, more severe labor market frictions, a lower initial tax rate, lower tax transfer ability, and greater credit market imperfections. Further, the mechanism tests demonstrate that tougher tax enforcement leads to increases in the effective income tax rate, cash holdings, and the cash flow sensitivity of real investment but decreases in accounts receivable and dividend payments. These results are consistent with the liquidity constraints channel. In addition, we exclude several alternative explanations and conduct a series of robustness checks. Overall, our findings indicate that corporate tax enforcement has large effects on the local labor demand, which provides some useful insights for local governments to stabilize employment during the COVID-19 pandemic.     

Tax Incentives and Maturity Mismatch between Investment and Financing: Evidence from China

This paper examines the effects of China's accelerated depreciation policy (ADP) on the maturity mismatch between investment and financing. Using panel data for China's A-share nonfinancial listed companies from 2010 to 2019 and a staggered difference-in-differences approach, we found the following. First, ADP significantly aggravated the degree of corporate maturity mismatch, and this result was robust across multiple checks. Second, due to an insufficient long-term loan supply, firms had to finance the fixed investments induced by ADP with short-term debts, leading to maturity mismatches. Third, the positive policy effects were mainly significant for firms with high policy exposure, high-risk preferences, a high degree of information asymmetry, and firms with weak long-term financing capacity. Finally, maturity mismatch exacerbated corporate financial risks. Our research findings indicate that passive maturity mismatch is prevalent among Chinese companies and emphasize the need to address financial repression in order to mitigate the potential financial risks that may arise from tax incentives.     

人口老龄化必然导致资本替代劳动吗

经济学理论认为，人口老龄化会导致劳动力成本上升，从而改变企业的要素结构、通过资本替代劳动的方式应对，但不同类型的企业对老龄化做出的反应可能存在差异，需要进行深入分析。文章利用中国工业企业数据对上述问题进行了研究，实证结果显示：整体来看，人口老龄化显著提高了企业的资本劳动比，但资本劳动比的上升并不一定表现为资本对劳动的替代。在规模较大、融资约束较轻的企业，老龄化促使其用固定资产投资替代了劳动，但在规模较小和融资约束程度较为严重的企业，人口老龄化并没有显著提高其固定资产投资，只是缩小了其劳动力雇佣规模，说明企业规模和融资约束是影响企业要素结构升级的重要因素。此外，文章还发现人口老龄化主要促使企业利用资本替代低技能劳动力，而人口老龄化的资本替代劳动效应在资本密集型、生产率水平较高和非出口企业中更为显著。文章从微观企业投资视角拓展了人口老龄化的经济效应的研究范畴，并通过规模效应和融资约束角度分析了制约工业企业提高智能化生产程度的因素，从而对传统的见解提供了有益的补充。文章的研究结论能够为政府制定积极应对人口老龄化和助力企业要素结构升级的相关政策提供经验证据的支持。     

Does stock market listing impact investment in Japan?

We provide the first large sample comparison of investment by Japanese listed and unlisted public firms. We show that listed firms invest more and have greater sensitivity to investment opportunities than comparable unlisted companies. Our findings suggest that the role of listing in alleviating financial constraints and agency costs is more important than potential underinvestment due to myopic behavior. However, the positive relationship between listing and investment is primarily driven by standalone firms. Further analysis confirms that as the number of subsidiaries in a business group increases the positive impact of listing on investment declines. Additionally, we find that the positive impact of listing on investment is greater for financially constrained firms. We also document a positive association between stock liquidity and investment for listed firms. Taken together, our results suggest that stock markets play an important role in easing financial constraints and preventing managerial shirking both of which increase investment. Finally, we show that higher levels of ownership by financial institutions, board members, and foreign investors increases corporate investment.     

The minimum wage and the financialization of firms: Evidence from China

This paper utilizes China's A-listed firm data to investigate whether increasing the minimum wage promotes the financialization of firms. We apply instrumental variable estimation and various robustness tests to address measurement errors and potential endogeneity. We find robust and consistent evidence that exposure to higher minimum wages increases a firm's investment in financial assets. Furthermore, we explore the effects of moderators, such as increased employment stickiness, intensification of financial constraints, and reduced innovation activities as potential explanations for the positive effect of increasing minimum wages. Moreover, firms located in non-coastal cities with relatively higher equity concentration and lower market competition are substantially more incentivized to increase investment in financial assets. Overall, this paper provides new insights into understanding the effects of increasing labor costs on firms' asset allocation in emerging market economies.     

税收征管与企业对外投资:来自“金税工程三期”的证据

近些年来，我国对外投资规模迅猛增长，税收征管强度也在不断提升。那么，税收征管是否推动了中国企业的对外投资行为呢？鉴于鲜有文献探讨这一极具现实意义的话题，本文利用"金税工程三期"政策上线这一提高税收征管能力的准自然实验，采用双重差分法首次实证检验了税收征管对企业对外投资行为的影响作用。研究发现："金税工程三期"这一增加企业纳税遵从度、促进"应收尽收"的税收征管政策冲击显著地提高了企业对外投资的可能性、增加了企业对外投资规模，并且这一结论在引入更多控制变量并排除同期其他政策干扰、安慰剂检验、更换样本周期、倾向得分匹配分析等情况下依旧稳健。潜在的影响机制分析发现，"金税工程三期"这一税收征管政策冲击增加了企业的避税动机，表现为企业偏好于向税率低的东道国进行投资。异质性检验结果显示，"金税工程三期"这一税收征管政策冲击对企业对外投资行为的影响作用在不同对外投资事件类型、不同所有制类型的企业、不同地区、不同行业之间存在明显差异。最后，依据本文结论提出了积极落实减税降费政策、适度地提升银行业竞争水平的政策建议。     

金融发展和中国对外直接投资——基于制造业行业面板数据的分析

论文考察了东道国金融发展水平对中国制造业企业对外直接投资的影响机制。理论分析指出,东道国金融发展能够通过竞争效应和融资效应两种渠道影响中国对外直接投资,而且两种效应的作用相反。经验研究结果表明东道国金融发展所产生的融资效应要大于竞争效应,且金融发展对中国对外直接投资的促进作用具有门槛系效应,只有当行业的融资需求达到一定水平,这一促进作用才存在。另外,金融发展对于技术密集型对外直接投资的影响更加明显。     

Financial constraints and foreign direct investment: firm-level evidence

Low productivity is an important barrier to the cross-border expansion of firms. But firms may also need external finance to shoulder the costs of entering foreign markets. We develop a model of multinational firms facing real and financial barriers to foreign direct investment (FDI), and we analyze their impact on the FDI decision. Theoretically, we show that financial constraints can affect highly productive firms more than firms with low productivity because the former are more likely to expand abroad. We provide empirical evidence based on a detailed dataset of German domestic and multinational firms which contains information on parent-level financial constraints as well as on the location the foreign affiliates. We find that financial factors constrain firms’ foreign investment decisions, an effect felt in particular by firms most likely to consider investing abroad. The locational information in our dataset allows exploiting cross-country differences in contract enforcement. Consistent with theory, we find that poor contract enforcement in the host country has a negative impact on FDI decisions.     

Tax incentive and corporate financial performance: Evidence from income tax revenue sharing reform in China

How to stimulate corporate performance is a crucial issue of general concern in all countries. This paper examines how China’s Income Tax Revenue Sharing Reform in 2002 affects corporate financial performance. Unlike general tax policies that directly adjust the nominal tax rate or depreciation allowance, this reform indirectly affects the effective Enterprise Income Tax (EIT) rate by switching tax administration, thereby affecting corporate financial performance. We use a firm-level data-set from Annual Survey of Industrial Firms (ASIF), and test the impact by using a quasi-natural experimental design through regression discontinuity design (RDD). We find that after the reform, the effective EIT rate (ETR) of enterprises collected EIT by State Administration of Taxation (SAT) was 10% lower than that of enterprises collected EIT by the Local Administration of Taxation (LAT). If the ETR reduces by 1%, corporate financial performance, more specific, Return on Asset (ROA), increases by 1.7%. There are two available channels: increasing fixed asset investment (FAI), and alleviating external financial constraints. Additionally, the impact can be weakened for locally SOEs, large firms, firms with low SA index and those in less competitive industries.     

Rebalancing in China: A taxation approach

The rebalancing of the Chinese economy is analyzed through a heterogeneous taxation of various types of firms. Based on a two-country dynamic general equilibrium model, the paper applies tax reforms to raise consumption, reduce some firms' overinvestment (overcapacities) and maintain a high level of welfare.To rebalance consumption and investment, taxation may allow reallocating a part of the labor force to firms that are not overinvesting (via business taxes and social security contributions). Moreover, the correction of distortions in production factor costs (capital and labor) is necessary during certain reforms applied in the model; that is, on the one hand, higher credit costs for firms that face soft budget constraints (via financial transactions taxes) and, on the other hand, a catch-up of foreign firms' wages by domestic firms (via social security contributions).These tax reforms bring welfare benefits to households and stabilize the welfare reaction to productivity shocks. Another interesting result is that in this framework, the rebalancing of the domestic demand in China does not require the readjustment of the external financial position. Indeed, the aggregate savings rate remains high and the supply of domestic assets is reduced.Finally, another model proposes a heterogeneous taxation of consumption across home and foreign goods to enhance consumption.     

Financing and monitoring in an emerging economy: Can investment efficiency be increased?

This study investigates the influence of the financial system on firms' investment efficiency in China. For this purpose, we employ country level data of capital markets and financial institutions along with financial data from 2797 Chinese firms in the period from 1998 to 2015. The firms are priori classified into four groups, by high and low values of financial constraints and agency problems. Results show that financial development influences firms' investments positively either directly or by reducing cash flow sensitivity. The impact remains the same for all types of firms. Moreover, the financial structure has an impact on investment efficiency of firms; this result also remains the same even after controlling levels of financial development. Study contributes that capital market based financial structure impacts investment decisions by reducing financing constraints and agency issue due to its strong monitoring ability.     

Financial reform and financing constraints: Some evidence from listed Chinese firms

This paper examines the impact of recent financial reforms in China on the financing constraints and investment of publicly-listed Chinese firms. Two continuous indices are constructed to measure the evolution and intensity of financial reforms: a financial liberalization index and a capital control index. Dynamic panel GMM method is used to estimate firms' financing constraints in an Euler-equation investment model. Based on panel data of listed firms for 1996–2007, we find that large firms face no credit constraints and smaller firms display significant constraints. However, the sensitivity of large firms' investment to their cash holdings is heightened as more financial reforms take place. It appears that reforms that gradually eliminate preferential treatments to large firms, primarily state-owned enterprises (SOEs) in China, have subjected these firms' investment decisions to stricter market-based discipline and therefore raised their financing constraints. No significant change in the financing constraint is detected for smaller firms in China. This is interpreted as financial reform in China has not been substantial enough for its benefits to reach smaller firms.     

税收政策对促进中小企业发展的经济学分析

中小企业的发展离不开税收政策的支持。通过税收政策对中小企业投资、吸纳劳动力就业等方面的经济学分析表明,税收政策对促进中小企业发展有着极强的杠杆撬动作用,但也存在一定局限性。对此,要以辩证唯物的观点:坚持"有用论",反对"无用论",警惕"万能论"。     

DEVELOPING EMPLOYMENT EFFECTS OF INNOVATIONS: MICROECONOMETRIC EVIDENCE FROM TAIWAN

This paper aims to identify the effects of innovation on employment and labor composition in Taiwan. Using a new and detailed firm‐level data set, the empirical results determine that innovations, measured by R&D investments or patent counts, have a positive impact on employment. Both of the estimated employment effects of product and process innovations are overall significantly positive. Although the effects of process innovations differ between high and low R&D‐intensive industries, the process innovation tends to expand the firms’ output and then increase employment for high R&D‐intensive industries. However, it frequently results in laborsavings in terms of production work and reduces jobs in low R&D‐intensive industries. Moreover, technological innovations are found to be non‐neutral, leading to a shift in labor composition in favor of skilled and more educated workers.     

Regional financial technology and shadow banking activities of non-financial firms: Evidence from China

Financial technology has greatly revolutionized the finance industry. However, the impact of financial technology on the shadow banking activities of non-financial firms has not been examined. Using a sample of Chinese listed firms from 2011 to 2018, we find that regional financial technology is positively associated with the shadow banking activities of non-financial firms, which is more pronounced for firms with low profitability and firms listed only in China’s A-share market. We show that financial technology can enhance the shadow banking activities by alleviating financing constraints. In addition, an increase in the equalization of profit rate and an increase in investment in the real economy reduce the positive effect of financial technology on the shadow banking activities. Further analysis suggests that financial regulations can attenuate excessive shadow banking activities of non-financial firms driven by financial technology.     

基础设施建设支出、结构性减税与最优政策选择

财政政策的最优政策选择问题对于国家宏观调控政策的出台具有指导意义。既往的研究忽略了利用动态一般均衡的方法探求具有双重外部性的基础设施建设支出与结构性减税支出的政策选择问题。本文利用引入基础设施建设支出和结构性减税的新凯恩斯DSGE模型,测算比较基建支出和结构性减税的政策福利效应。研究表明：具有双重外部性的基础设施建设支出不仅可以通过提高生产效率的方式促进产出,还可以通过挤入居民消费的方式加强政策福利效应。经过测算,短期的基建支出乘数大于结构性减税的政策乘数。同时,基建支出长期平均产出乘数小于结构性减税的平均产出乘数。与结构性减税政策相比,增加基建支出对于财政资金有限的政府是短期内更加有效的产出刺激政策,但在长期中,结构性减税政策不仅具有较高的政策效应,还可以从消费、劳动、投资等角度实现结构性政策目标。进一步研究发现,地区经济发展水平的不同会导致各地区的最优政策选择存在差异性：发达地区可以通过结构性税收政策解决结构性问题的同时实现长期经济增长;而欠发达地区则更应该注重运用基础设施建设为主的支出政策以促进经济增长;但随着人口逐渐从欠发达地区流出,提高欠发达地区的基建支出是否是可行之策,还需要考虑区域协调发展等诸多因素。     

Expansionary monetary policy and credit allocation: Evidence from China

We identify the impact of expansionary monetary policy in China during the 2008–2009 global financial crisis on the credit and investment allocation among firms. We obtain robust evidence that expansionary monetary policy led to the misallocation of bank credit to less productive firms after controlling for confounding factors. However, we find that investment increased more for more productive firms. Additional analyses show that this occurred partly because more productive firms hoarded cash before the crisis, and partly because less productive firms invested more in financial assets.     

Tax‐Adjusted q Model with Intangible Assets: Theory and Evidence from Temporary Investment Tax Incentives

We propose a tax‐adjusted q model with physical and intangible assets and estimate the effect of bonus depreciation in the United States in the early 2000s. We find that investment responds moderately to tax incentives, but allowing for heterogeneity reveals that intangible‐intensive firms respond more than physical‐intensive firms and that this difference is accentuated among large firms. Accounting for intangible assets increases the estimated total investment response from 3.7 to 14.3% of aggregate investment in 2000 among the largest 500 firms. Our results suggest that understanding the behavior of large and intangible‐intensive firms matters for investment policy.