Estimating the Incidences of the Recent Pension Reform in China: Evidence from 100,000 Manufacturers

13 Pages Posted: 26 Feb 2013

See all articles by Zhigang Li

Zhigang Li

University of Hong Kong

Mingqin Wu

South China Normal University

Date Written: April 2013

Abstract

An ongoing reform in China mandates employers to contribute significant amounts to employee pension funds. The current study estimates the impact of this reform on the wage, employment, and performance of firms using data from over 140,000 medium and large manufacturers in China during 2004 and 2006. We find that the nominal wages of employees were rigid, but their real wages may have declined due to the pension reform. In addition, we find an interesting dichotomy in the incidences of pension reform. In localities with high agglomeration levels, firms' profits declined because the pension burden could not be fully transferred to employees. In less agglomerated jurisdictions, firms responded positively to pension reform, possibly because local governments overā€subsidized the pension costs as a way to attract investment.

JEL Classification: H32, H55, J26

Suggested Citation

Li, Zhigang and Wu, Mingqin, Estimating the Incidences of the Recent Pension Reform in China: Evidence from 100,000 Manufacturers (April 2013). Contemporary Economic Policy, Vol. 31, Issue 2, pp. 332-344, 2013, Available at SSRN: https://ssrn.com/abstract=2224479 or http://dx.doi.org/10.1111/j.1465-7287.2011.00304.x

Zhigang Li (Contact Author)

University of Hong Kong ( email )

Hong Kong, HK
China
852-9722-3859 (Phone)

HOME PAGE: http://www.econ.hku.hk/~zli

Mingqin Wu

South China Normal University ( email )

483 Wushan Str.
Tianhe District
Guangzhou, 510631, Guangdong 510642
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
387
PlumX Metrics