| ID | 187858 |
| Title Proper | Investment incentives and the relative demand for skilled labor |
| Other Title Information | Evidence from accelerated depreciation policies in China |
| Language | ENG |
| Author | Zhao, Lexin |
| Summary / Abstract (Note) | 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. |
| `In' analytical Note | China Economic Review Vol. 73; Jun 2022: p.101786 |
| Journal Source | China Economic Review 2022-05 73 |
| Key Words | Tax Incentives ; Financing Constraints ; Tax Compliance ; Accelerated Depreciation ; Relative Demand for Skilled Labor |