Firm Compliance With Social Insurance Obligations Where There is a Weak Surveillance and Enforcement Mechanism: Empirical Evidence from Shanghai
20 Pages Posted: 5 Nov 2007
This article examines why firms in Shanghai comply or over-comply with social insurance obligations in a regulatory environment where the expected punishment for non-compliance is low. Our first finding is that firms found to be in non-compliance in the first audit in 2001 were moved into a separate violation category and the probability of being re-audited in 2002 was significantly higher if the firm was in that category. Our second main result is that, across the board, firms which were re-audited continued to underpay in 2002 but the extent of underpayment was significantly reduced.
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