The employment and wage effects of export VAT rebates: evidence from China

Bo Gao (Lead / Corresponding author), Jing Ma, Zheng Wang

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
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Abstract

This paper studies the employment and wage effects of VAT rebates to exporters with comprehensive firm-product-level data of China. It is found that the adjustments in VAT rebates significantly and positively affect firm’s employment but have no statistically significant effect on firm’s wage. Moreover, this paper finds that the employment effect of VAT rebates is heterogeneous across firms. In particular, low-productivity firms are more sensitive to the adjustments of VAT rebates than high-productivity firms, suggesting that an increase of VAT rebates may cause mis-reallocation of resources.
Original languageEnglish
Pages (from-to)347-373
Number of pages27
JournalReview of World Economics
Volume157
Early online date18 Nov 2020
DOIs
Publication statusPublished - May 2021

Keywords

  • VAT rebates
  • Employment
  • Wage
  • Firm heterogeneity
  • Trade policy

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