Journal of Finance and Economics is supervised by Ministry of Education of PRC, and sponsored by Shanghai University of Finance and Economics. It aims to include research results on the major theories and practical problems in China’s reform and opening up and modernization of economic construction. Its scope covers all the major fields of Economics, including Public Economy, Finance, Accounting, Economic history, Regional Economics, Industrial Economics, International Economics. The Journal is included in CSSCI.
This paper first built a dynamic multi-regional CGE model incorporating induced technical change and then simulated the influence of the change in the scale and the proportion of fiscal expenditure on technical progress and coordinated economic development in eight regions through the model. The simulation results show that increasing fiscal R&D expenditure in the northeast, the central or the western region can promote the improvement of physical capital efficiency and economic growth in all these three regions, but it is harmful to the improvement of human capital efficiency in the three aided regions and the economic growth of the other unaided regions. The increase in education expenditure has no significant effect on all these eight regions. If we control the fiscal expenditure scale in the northeast or the central region and increase the proportion of fiscal expenditure in R&D at the same time, we can promote the technical progress and economic growth of the two regions. If we want to get a greater degree of technical progress and economic growth in the northeast or the central region, we can increase the proportion of fiscal R&D expenditure in both regions at the same time. At last, fiscal expenditure on science and education will change over time, so it is necessary to adjust the choice of number and proportion of fiscal science and education expenditure in different regions at different times, and only in this way can make China on the win-win road of technical progress and coordinated regional economic development.
Summary: The minimum wage standard is an important system to protect the legitimate rights and interests of workers and maintain the basic living standards of residents. Then, in the face of the rising trend of the minimum wage, how will Chinese enterprises respond? In the short-term, facing the pressure of rising production costs, will companies accelerate the R&D and technology innovation, and replace the relatively expensive labor with technology and capital? Will the intensified market competition accelerate the exit of some low-value-added and low-end manufacturing enterprises, and speed up the pace of transformation and upgrading of the entire industry? These issues with far-reaching implications for China’s industrial restructuring and manufacturing development are worthy of in-depth thinking and research. Using the comprehensive database obtained from the matching of industrial enterprise database, patent database and regional minimum wage database, this paper carries out the mechanism analysis and the empirical test from two aspects, and inspects whether the increase of Chinese minimum wage standard will bring about industrial transformation and upgrading: On the one hand, the rise in wages will directly lead to industrial upgrading by stimulating corporate innovation. Through the empirical test of the two-stage model of Heckman, the preliminary results show that the rise of the minimum wage will not only significantly stimulate enterprises to increase R&D innovation and innovation achievements, but also improve the efficiency of R&D innovation. On the other hand, the rise of the minimum wage will increase the production cost of enterprises, squeeze the profit margin of enterprises, force low-productivity enterprises to withdraw from the market, encourage enterprises to increase R&D and innovation, and indirectly realize the transformation and upgrading of industries. By constructing the enterprise exit indicator, our probit panel random effect model estimates that the rise in the minimum wage does increase the risk of low-productivity companies being eliminated by the market. From the perspective of exogenous policy shocks—the adjustment of the minimum wage standards in regions, this paper innovatively combines the patent application data obtained by the Chinese Patent Database, and comprehensively and profoundly explores how the continuously raised minimum wage will force some enterprises to accelerate transformation and upgrading. The conclusions of this paper have important reference values for the formulation of the minimum wage standard in regions, innovation incentives and industrial upgrading policies: First, the minimum wage level should be adapted to the current development of local industry, following the principle “moderate, stable, and controllable.” Second, further improving the structure of the minimum wage system will be helpful not only to improve income inequality, but also to transform China’s dependence on the export-oriented economic growth mode.
Since the call of Premier Li Keqiang for the “mass entrepreneurship and innovation,” the society has set off a wave of entrepreneurship for all. Among them, college students, overseas students and returning migrant workers are particularly prominent. Inspiring the “double innovation” vitality has also become one of the important governance goals of the government at all levels, and the effective path to seek to stimulate entrepreneurial vitality has become a hot topic of concern for policy makers and theorists. By using the latest 2016 micro-data from the China Family Tracking Survey (CFPS), and the discrete selection model and the OLS model, this paper analyzes the impact of social interaction on family entrepreneurial decision-making, and explores its mechanism. The results show that the three proxy variables of social interaction: relationship consumption, communication expenditures and non-family members’ meal expenses have a positive impact on family entrepreneurial decision-making at a level of 1%. Specifically, in the case where other variables are fixed, each increase in one unit of human welfare payments, communication expenditures and non-family members’ meal expenses will increase the chances of family entrepreneurship by 1.7%, 3.7% and 3.5%. As far as the impact mechanism is concerned, (1) Social interaction information acquisition and social learning mechanism indicate that in areas with high entrepreneurial participation rates in districts and counties, whether it is human welfare payments, communication expenditures or non-family members’ meal expenses, entrepreneurial decision-making has had a positive impact; in areas with low entrepreneurial participation rates in districts and counties, in addition to personal spending, communication expenditures and nonfamily members’ meal expenses will also have a positive impact on entrepreneurial decision-making. However, their coefficients show that the social interaction coefficient of the districts with high entrepreneurial participation rates is far greater than the social interaction coefficient of the districts with low entrepreneurial participation rates, which indicates that the social interaction effect of districts and counties with high entrepreneurial participation rates is greater than that of districts and counties with low entrepreneurial participation rates, that is, the social interaction effect of districts with high participation rates in districts and counties is more obvious. (2) The relative wealth concern mechanism shows that in the regions with low income Gini coefficient, the three proxy variables of social interaction have a positive impact on family entrepreneurial decision-making; in the regions with high income Gini coefficient, except for the impact of human welfare payments on family entrepreneurial decision-making, the coefficients of the other two proxy variables are insignificant. This shows that in areas with small income gaps, the effect of social interaction on the participation of family entrepreneurs is more obvious. (3) The financing constraint mechanism shows that social interaction helps to alleviate the financing constraints of family entrepreneurship through informal lending channels, thus effectively increasing the probability of family entrepreneurship. The expansive discussion shows that social interaction and network information are also channels for family entrepreneurs to obtain relevant information, and there is a mutual substitution relationship between them. We use the cross-coefficient coefficient of the two to measure this substitution relationship. The results show that the coefficient of social interaction and network information cross-term is negative. Although it is statistically insignificant, the economic significance indicates the existence of this alternative relationship. The policy implication of this paper is that it provides a new policy perspective for stimulating the “double innovation” vitality. Relevant departments should fully consider the role of social interaction when formulating policies involving individual family entrepreneurship.
In 2016 and before, Chinese enterprises needed to pay at least 30% of the total wages of their employees for social insurance premiums. Against this background, can the contribution rate of China’s social insurance system for urban employees be reduced? If so, which level can the contribution rate be reduced to? Considering that the basic pension insurance for urban employees occupies a pivotal position in the social insurance system for urban employees, this paper takes it as an example, and analyzes whether the contribution rate can be decreased in the short term (2018−2025) and the medium term (2018−2050) by using actuarial models, in order to provide a more scientific quantitative basis for the government to introduce policies to ease the contribution burden for enterprises. The study takes two assumptions as its prerequisite: one is that the basic pension fund for urban employees should be breakeven; the other is that the replacement rate of pensions should be unchanged. Based on the actuarial models and the assumptions of related parameters, this paper finishes a series of simulations and the results are shown as follows: (1) If there is no policy intervention, the cumulative deficit of the basic pension fund for urban employees will appear in 2028, and the contribution rate can be decreased in the short term. In the medium term, the contribution rate should be increased by 0.56% every two years, or be increased by 1.29% every five years. (2) When the universal two-child policy is implemented, although the contribution rate can be reduced in the short term, it should be increased by 0.36%–0.51% every two years, or be increased by 0.83%–1.19% every five years. (3) If the government further introduces the policy of raising retirement age and invests the basic pension fund into the capital market, the contribution rate can be decreased by 0.3%–0.43% every two years, or be decreased by 0.71%–0.99% every five years in the medium term. (4) If the government wants to alleviate the contribution burden on employers in the short term, it needs to invest a total of CNY 13.31–145.23 trillion into the pension fund; if the government focuses on the medium term, it does not need to invest any additional money into the pension fund. (5) If the contribution rate is being reduced every five years, compared with the case of being reduced every two years, the fiscal investment can be decreased by 2.21% to 36.96%. The above results have passed the sensitivity test. Therefore, to ease the contribution burden on enterprises, the government should encourage fertility, raise retirement age, and invest the pension fund into the capital market as soon as possible. In addition, taking into account the future fiscal burden, the government should also focus on the medium and long term when reducing the contribution rate, and minimize the contribution rate reduction frequency.
Along with the problems of overcapacity and declining investment returns of China’s enterprises in real economy, more and more enterprises in real economy are involved in the financial and real estate fields, allocating excessive financial assets, so as to obtain higher returns than the main investment. The preference for virtual economy or excessive financialization will directly affect the financial status of enterprises. The existing research just involves the reasons of financial asset allocation of real business, economic consequences, and enterprise’s financial risks. While the motivation of financial asset allocation of enterprises in real economy is “preparing for a rainy day,” such as preventing possible financing constraints, being unable to repay maturing debt and for other financial risk activities, or is “putting the cart before the horse” to seek profits, such as giving up main business investment and inhibiting innovation, there is no literature study currently. However, it is of great significance to correctly understand and effectively supervise the financialization of enterprises in real economy, fully play the benign role of financial asset allocation, and effectively curb the disconfirmation of national economy. Based on the above, this paper selected the empirical data of China’s A-share listed companies from 2007 to 2016, and empirically tested the relationship between the total amount, term and other static dimensions of financial asset allocation and financial risks of enterprises. In general, the more financial assets a company has, the more serious financial risks it faces. Holding short-term financial assets can alleviate financial risks faced by enterprises and is manifested as the activity of “preparing for a rainy day.” Holding long-term financial assets aggravates financial risks of enterprises, which is an act of “putting the cart before the horse.” However, there is no evidence that the larger the increment of financial assets is, the easier it is to increase financial risks of enterprises. In addition, when enterprises are faced with higher financing constraints and tighter monetary policies and belong to the state-owned enterprises, the more financial asset allocation and long-term financial asset holdings they have, the easier it is to increase financial risks faced by enterprises. This paper provides three policy implications. (1) enterprises in real economy should reasonably grasp the limits of financial asset holdings based on their own free cash flow status and long-term development goals, and combined with the national macro-control policies. They should not hold too many and too-long-term financial assets due to the excessive pursuit of immediate interests. (2) When formulating the asset allocation strategy, enterprises should optimize the financial asset allocation structure and reasonably allocate the term of financial assets to better meet the capital needs of the enterprise’s main business. (3) Rational allocation of financial assets and prevention of financial risks should also take full account of the impact of financing constraints, property nature and monetary policies. The marginal contribution of this paper can be elaborated from three aspects. (1) It can further enrich relevant theories on financialization and reality-to-fiction, and provide empirical evidence and policy guidance for deepening China’s financial reform and national strategic transformation. (2) It provides necessary micro-level evidence for rational allocation of financial assets, curbing excessive financialization and preventing major systemic risks. (3) It provides necessary empirical evidence for reasonably distinguishing the financialization approach rather than blindly regarding financial asset allocation as a negative behavior. (4) It can guide enterprises to reasonably grasp the total amount, term and increment of financial asset allocation under different internal and external constraints.
