Population mobility and employee social responsibility: evidence from hukou reform in China

ABSTRACT

Population mobility may have a profound impact on the labor market, affecting firms’ employment decisions. We consider hukou reform in China as a quasi-natural experiment in identifying the effects of population mobility on employee-related corporate social responsibility (employee social responsibility, or ESR). The empirical results show that hukou reform prompts firms to invest more in ESR activities, particularly in ESR activities with weak externalities and in regions with a smaller labor market size. Cross-sectional tests suggest that the effects of hukou reform on firms’ ESR investment are stronger for more financially constrained firms and those in high-tech industries, and in more competitive regions. The findings have important practical implications for employment strategies that firms should adopt when the labor market becomes more competitive.

KEYWORDS:

• Population mobility
• hukou reform
• employee social responsibility
• labor market

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. According to the financial situation of the enterprises, qualitatively divide the enterprises into five levels of financing constraints. Refer to Hadlock and Pierce (2010), we estimate the SA index by using the Ordered Probit model as – 0.037*Size+0.043*Size²–0.40Age, where Size equals the log of inflation-adjusted book assets, and Age is the number of years the firm is listed with a non-missing stock price. The higher the SA is, the more serious the financing constraints of enterprises are;

2. Due to the existence of ownership discrimination, private enterprises usually face more serious resource constraints than state-owned enterprises. SOE is 1 if the firm is a state-owned company and 0 otherwise.

3. Refer to Xie, Tang, and Lu (2009); we select the manufacturing and information technology industries as the high-tech industry group.

4. LaborIntensity is measured as the ratio of the log value of ‘cash paid to employees’ to the log value of sales revenue. The higher the index, the higher the labor intensity of the enterprise.

5. Marketization: the higher the marketization, the higher the level of regional market competition.