Social insurance payments and labour investment efficiency: A quasi-natural experiment

This study exploits the passage of the 2011 Social Insurance (SI) Law in China to investigate how a labour protection regulation affects corporate labour investment efficiency (LIE). We find that labour-intensive firms invest more efficiently in labour after the SI Law. Our findings are robust to alternative measures, selection bias and endogeneity concerns. Overall, our findings show that labour protection regulations have a profound impact on corporate employment decision-making.