The research result of Professor Zhang Kezhong, Deputy Director of IIDPF and his co-authors, The Transfer Effect of Social Security Contributions and Labour Market Redistribution, was published in the top journal Management World, Issue 9, 2023.
Abstract: The social insurance system is an important institutional arrangement for realising common prosperity. Based on the change of provincial pension insurance collection agencies at the beginning of the 21st century (normative reform) and the promulgation of the Social Insurance Law in 2011 (legalistic reform), this paper systematically evaluates the pass-through effect of social security contributions and labour market redistribution. The study finds that (1) both reforms increased the actual social security contribution rate of enterprises, but the shifting of the contribution burden took different forms. The increased contribution burden of the standardised reform is borne by enterprises and reduces the size of their employment, while the increased contribution burden of the legalised reform is shared by both employees and enterprises, which both reduces employees' wages and reduces the number of people employed by enterprises; (2) further analysis shows that the difference in employment shocks to employees of different skills in the standardised reform is not robust across models, while low-skilled employees in the legalised reform receive relatively larger shocks to their wages, suggesting differences in the performance of the labour market redistribution effect; (3) Wage rigidity and contribution convexity better explain the differences in the form of pass-through of social security contributions in the two reforms and the reasons for the labour market redistribution effect. The findings provide policy insights for improving the redistributive function of China's social security system and solidly promoting common prosperity for the whole society.
Bio: Prof. Zhang Kezhong, Dean of School of Public Finance and Taxation of Public Finance and Taxation, Wenlan Distinguished Professor, PhD supervisor, Deputy Director of IIDPF under the Ministry of Education and the Ministry of Science and Technology. Professor Zhang is the executive director of China Finance Association, executive director of China Development Economics Association, executive director and founding member of China Labour Economics Association, performance evaluation expert of Hubei Provincial Department of Finance, member of Expert Committee of Hubei Provincial Department of Civil Affairs, member of Expert Committee of Hubei Provincial Office of Poverty Alleviation, and vice-president of Wuhan Municipal Finance Association. He was a visiting scholar at Harvard Business School and Georgia State University. His main research areas include fiscal theory, income distribution and economic development, and global public economics. He has published more than 60 papers in domestic and international academic journals, such as Economic Research Journal, The Journal of World Economics, China Economic (Quarterly), The Journal of World Economy, China Industrial Economics, Journal of Financial Research, Applied Economics, Journal of Futures Markets and Economics & Human Biology. He is the chief expert of the major national social science project Research on Regulating the Order of Income Distribution and the Mechanism of Wealth Accumulation, and has presided over and participated in a number of projects of the National Natural Science and Social Science Foundation of China.