Social insurance contributions ratio and productivity of private enterprises in the heavy pollution industry: Evidence from China

Social insurance has been shown to have an important impact on enterprise competitiveness. However, there has been a lack of research linking social insurance to the productivity of enterprises, especially private ones in the heavy pollution industry. Using China's A-share listed private enterprises in the heavy pollution industry from 2009 to 2018 as samples, we adopt a GMM estimation method of panel data and empirically examine the impacts of social insurance contributions ratio on enterprise productivity. Furthermore, considering the fact that enterprises are heterogeneous, we divide the samples into labor-intensive enterprises and non-labor-intensive ones. Our empirical results show that high social insurance contributions incentivize enterprises to improve human resource allocation efficiency and labor efficiency. This in turn improves their technological efficiency. However, the increase in the proportion of social insurance contributions crowds out the investment in technological advancement of private enterprises in the heavy pollution industry and hinders their technological progress. Overall, the ratio of social insurance contributions has a negative impact on the productivity of these enterprises. In addition, our grouping analysis finds that the crowding-out effect of social insurance contributions on technological investment is more pronounced in the labor-intensive enterprises.