Research On The Incentive Effect Of Employee Welfare System

With the development of science,technology and economy,China has entered the high-quality development stage.In this critical period,the degree of China’s population aging has further deepened.As the main body of social development,population is the key variable affecting sustainable economic development.The acceleration of aging will not only increase the pressure on social security and public services,but also constrain the effective supply of labor force and have a lasting negative impact on social vitality,innovation and economic growth.In order to cope with aging population and fully tap the potential of labor supply,China has made a series of important instructions from the perspective of employee welfare system.As an important part of employee compensation,employee welfare is not only a supplement to social welfare system,but also an important means for enterprises to attract and motivate talents.From the perspective of macro economy,employee welfare system can help alleviate the imbalance of income distribution and stimulate the enthusiasm of workers.And it’s an effective means to stimulate the sustained economic growth under the aggravation of aging and the disappearance of demographic dividend.From the perspective of micro enterprises,the employee welfare system is of great significance to stimulate the autonomy and creativity of employees,improve the innovation level of enterprises,and enhance the competitiveness of enterprises.Therefore,it is of great practical significance to discuss employee welfare system to alleviate the macro and micro problems at present.Existing studies do not have sufficient discussion on employee welfare,and most of studies sum up salary and welfare to comprehensively study the overall impact of employee income.However,salary and welfare are related to the fairness and efficiency of income distribution at the enterprise level respectively.And they have different acting mechanism,which may lead to it’s difficult to form a unified conclusion.Although some studies have discussed the characteristics and functions of employee welfare,they have neglected the possible interaction between wage and welfare.Moreover,few studies have focused on the comprehensive effects of employee welfare on enterprise innovation,employee efficiency and enterprise competitiveness.Based on the above realistic situation and theoretical background,this thesis uses the data of Chinese A-share listed companies from 2007 to 2020 to systematically investigate the incentive effect of employee welfare system from three aspects.Firstly,in view of the difference between employee welfare and wage,the impact of employee welfare on wage effectiveness is explored.Secondly,as the important role of innovation and employee welfare may have different impacts on enterprise innovation,this paper further studies the impact of employee welfare on enterprise innovation.Finally,this thesis examines the incentive effect and economic consequences of employee welfare system at both employee and enterprise levels.After a series of analyses and tests,this paper mainly draws the following conclusions:First of all,as a method of redistribution,employee welfare enhances the protection of employees’ rights and interests,and coordinates the fairness and efficiency of income distribution.Specifically,firstly,employee welfare is positively correlated to the performance sensitivity of employee salary.Secondly,employee welfare can positively moderate the negative correlation between internal/external pay gap and employee efficiency.Then,by analyzing its mechanism,we find that employee welfare has an impact on performance sensitivity and pay gap through enhancing employees’ sense of justice and identity.In addition,further analysis shows that compulsory welfare is more conducive to improving the performance sensitivity of wages,while voluntary welfare is more conducive to reducing the negative impact of the pay gap.Moreover,employee welfare is more significant in non-state-owned enterprises,enterprises with low proportion of highly educated employees and areas with high unemployment rate.Secondly,employee welfare can improve the innovation performance of enterprises by optimizing the human capital structure of enterprises.Specifically,employee welfare is positively correlated with enterprise innovation performance,which can effectively improve the quantity and quality of enterprise innovation output.And further analysis shows that different types of employee welfare have different effects.Compared with voluntary welfare,compulsory welfare is more conducive to improving enterprise innovation performance.Moreover,the welfare of employees in non-state-owned enterprises and areas with high unemployment is more significant.Thirdly,as an important system of modern enterprise management,employee welfare helps to improve the efficiency of employees,while for enterprises,employee welfare enhances the competitiveness of enterprises.Then,further analysis shows that different types of employee welfare have different effects.Compared with voluntary welfare,compulsory welfare is more conducive to improving employee efficiency and enterprise competitiveness.Moreover,the welfare of employees in non-state-owned enterprises and areas with high unemployment is more significant.This paper systematically investigates the incentive effect of employee welfare.From the theoretical level,it not only considers the different mechanism of employee welfare and wage,but also considers the possible interaction between them.From the realistic level,the thesis reveals the behavior logic of employees under the influence of employee welfare system,which not only helps enterprises to improve employee efficiency and enhance enterprise competitiveness,but also provides some reference for the government to improve the income distribution system at the enterprise level and achieve high-quality economic development.The contribution mainly lies in:Firstly,different from previous studies that mostly focus on employee compensation(wage),this thesis focuses on employee welfare.We analyze the differences between employee welfare and salary in payment methods,distribution rules and incentive effect,and examine the impact of employee welfare on wage effect.This study expands the literature on employee welfare,wage,and pay gaps,and verifies the potential impact of employee welfare.It not only provides more direct and rich empirical evidence for demonstrating the role of employee welfare,but also helps the government and enterprises to correctly understand employee welfare and give full play to the role of employee welfare.Secondly,based on the background of Chinese system,this thesis further subdivides employee welfare into compulsory welfare and voluntary welfare,and examines their heterogeneous incentive effects and mechanisms.In general,compulsory welfare plays a leading role,indicating that employee welfare system needs to first meet the needs of employees for basic security.However,voluntary welfare is more conducive to alleviating the negative impact of wage gap,indicating that the employee welfare system should also take into account the fairness needs of employees.Thirdly,this paper systematically investigates the incentive effect and mechanism of employee welfare at the level of individual employee(labor efficiency)and enterprise(competitiveness).The research not only expands the literature about the incentive effect of employee welfare,but also verifies the important role of employee welfare and reveals the behavioral logic of employees under the employee welfare system.It provides some references for enterprises to recognize and mobilize employees’ enthusiasm,improve employees’ efficiency and enterprise competitiveness.