How Do Tax Incentives Affect Investment and Productivity? Firm-Level Evidence from China

• 成果类型: Article
• 署名作者: Liu, Yongzheng; Mao, Jie
• 署名单位: Renmin University of China; University of International Business & Economics
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20170478
• 发表日期: 2019
• 页码: 261-291
• 关键词: Financial constraints; trade liberalization; GROWTH; POLICY; INNOVATION; markups

摘要

China initiated a major reform for capital taxation in 2004. Completed in 2009, it introduced permanent tax incentives for firms' investment in fixed assets. We explore a unique firm-level dataset from years 2005-2012 and utilize a quasi-experimental design to test the impacts of the reform on firms' investment and productivity. We find that, on average, the reform raised investment and productivity of the treated firms relative to the control firms by 38.4 percent and 8.9 percent, respectively. We also show that the positive effects tend to be strengthened for firms with financial constraints.