Research On The Impact Of Tax Policy On Labor Market

Employment is related to fundamental interests of the people.However,since the new crown epidemic in 2020,China’s unemployment rate has risen obviously,the labor market has been severely impacted,and the contradiction between total employment and employment structure is prominent.We can expect that in the long term in the future,China’s labor market is still in a state of oversupply,China’s employment task is still very difficult.Alleviating the employment pressure,realizing employment adequacy,and promoting higher quality employment are key issues that need to be continuously paid attention to and carefully studied in the process of building a harmonious society in China.Tax Policy plays an important role in promoting employment,regulating income distribution,maintaining social stability and sound economic development.In this context,the impact of tax policy on the labor market is studied,the relationship between tax policy and employment is analyzed systematically from different levels,and the employment multiplier effect of tax policy is studied deeply,it is of great theoretical value and practical value to explore the influence of tax reform on employment structure,employment choice and wage level.Based on a review of the literature at home and abroad and an analysis of China’s tax policy background and employment situation,this paper studies the employment multiplier effect of enterprise income tax,the effect of agricultural tax reform on non-agricultural employment,the effect of individual income tax and self-employment of floating population,and the effect of enterprise income tax on wage level.Through the empirical research,this paper comes to the following conclusions:Firstly,based on the Industrial Enterprise Database,this paper calculates the employment multiplier of the enterprise income tax reform by taking the 2008 enterprise income tax reform as the exogenous policy shock.The results show that the absolute value of the employment multiplier estimated by the two-stage ordinary least squares method(2SLS)is about 6.9214,and the decrease of the enterprise income tax rate significantly increases employment.Further heterogeneous analysis shows that the employment multiplier effect of enterprise income tax reform only affects collective-holding enterprises and private-holding enterprises according to the situation of Enterprise Holding;The employment multiplier effect of the enterprise income tax reform in the western region is greater than that in the other regions.Through mechanism analysis,this paper finds that the impact of enterprise income tax reform on employment is mainly transmitted through the output of enterprises.Secondly,based on CHNS database and financial statistics data of cities and counties in China,the relationship between agricultural tax reform and non-agricultural employment in 2003 is analyzed by Probit model and double difference method.The empirical study found that the agricultural tax reform has a significant positive impact on non-agricultural employment,that is,the agricultural tax reform will increase non-agricultural employment.By distinguishing the major grain-producing areas from the non-major grain-producing areas,we find that there is a significant difference between the non-agricultural employment in the major grain-producing areas and that in the non-major grain-producing areas,reducing non-agricultural employment in major non-food producing areas.The results also show that,other things being equal,after the reform of the agricultural tax,the probability of men being employed in non-agricultural jobs will increase significantly,while the probability of women being employed in non-agricultural jobs will decrease significantly,that is,the agricultural tax relief on non-agricultural employment of the gender difference is also significant.The analysis of income heterogeneity shows that compared with high-income rural residents,the impact of agricultural tax reform on the participation of low-income rural residents in non-agricultural employment is greater.The institutional analysis found that agricultural tax reform affected non farm employment by reducing the per capital share of primary sector of the economy in GDP.Thirdly,based on the 2017 China Floating Population Dynamic Monitoring Survey(CMDS)data,the Probit model was used to empirically test the impact of individual income tax rate on self-employment.The study shows that the probability of self-employment of migrant workers increases with the increase of individual income tax rate,and the results are robust after a series of tests such as replacing model,adding control variables and using data of different years.In order to alleviate endogeneity,the average individual income tax rate of other individuals in the same city is used as the instrumental variable of the individual income tax rate,and the result is still significantly positive,and this effect will be greater than that estimated directly by the Probit model.Further analysis shows that starting from the city level,with the increase of personal income tax rate at the city level,the level of self-employment at the city level will gradually increase.At the same time,the gender difference at the city level is the same as that at the individual level,while the difference at the city level and that at the individual level have the opposite result.At the urban level,women’s self-employment is more affected by personal income tax than men’s,and urban floating population’s self-employment is more affected by personal income tax than migrant workers.Finally,using the data of China industrial Enterprise database from 2004 to 2013,this paper empirically studies the relationship between corporate income tax and wage level through simultaneous equations.The results show that there is a tax incidence effect between corporate income tax and wage level,that is,corporate income tax will reduce wage level,while wage level will have a positive effect on tax rate,there is a reverse subsidy.Heterogeneity analysis shows that both domestic and non-state-owned enterprises have tax destination effect and reverse subsidy effect,but there is no tax destination effect in foreign enterprises,and neither tax destination effect nor fiscal subsidy effect is obvious in state-owned enterprises.By means of quantile regression analysis of tax incidence effect,it is found that 25%of corporate income tax rate has the largest tax incidence effect,while 50%of corporate income tax rate has no tax incidence effect.The quartile regression results of the reverse subsidy showed that the 25%and 50%quartile had a relatively larger impact.Long-term effect analysis shows that the tax incidence and reverse subsidy still exist in the long run,and the effect size does not change significantly.