Is Social Security Investment Beneficial to Enterprises to Improve Labor Productivity?: Empirical Research Based on China Employer-Employee Survey

Abstract

Social security rights are strongly anchored by international human rights law and are a key element of international labor standards. It also plays an important role in the competitiveness of companies. This paper investigates the relationship between social security expenditure indexes and labor productivity to fill the gaps in this field. In other words, we make an attempt to answer the question: To what extent is social protection associated with better firm level performance? The empirical results demonstrated that high social insurance contributions encourage enterprises to improve the efficiency of human resources allocation and labor efficiency. Thus, their technological efficiency undergoes betterments. However, the rise in the share of social insurance contributions overshadows private investment in technological advancement and hinders its technological progress. So, the ratio of social insurance contributions influences the productivity of these companies negatively.