The impact of export VAT rebates on firm productivity: Evidence from China

Date

2020-12-14

Advisors

Journal Title

Journal ISSN

ISSN

0378-5920

Volume Title

Publisher

Wiley

Type

Article

Peer reviewed

Yes

Abstract

This paper studies the impact of export VAT rebates on firm productivity with Chinese firm-product-level data. We find that higher VAT rebates significantly raise firm productivity. The results are robust to various estimations of firm productivity. Moreover, this paper finds that the impact of export VAT rebates on firm productivity is significantly different across firms and sectors. More specifically, our results suggest that the impact is mainly driven by firms with small export intensive margins and large export extensive margins, new exporters, financially constrained firms and low-productivity firms. Furthermore, in high-tech sectors, the impact is significantly large with a one percentage point increase of the firm rate of VAT rebates nearly raising firm productivity by 6%.

Description

Keywords

firm productivity, heterogeneity, VAT rebates

Citation

Tang, B, Gao, B, Ma, J (2021) The Impact of Export VAT Rebates on Firm Productivity: Evidence from China, The World Economy, 44 (10), pp. 2797-2819

Rights

Research Institute