The Enforcement Of The Social Insurance Law And Firm Cost Stickiness

Cost Stickiness refers to the asymmetric change between cost and business volume.The reasons for its formation mainly include adjustment costs,manager expectations and agency problems and it is affected by many factors,including the nature of the company itself,the characteristics of the manager and the macro external environmental factors.After the implementation of the Social Insurance Law in 2011,all companies were required to pay social insurance for their employees,and the labor costs faced by the companies increased.Therefore,companies tend to reduce the number of new employees when the business volume rises;and when the volume declines,it tends to reduce the redundant staff and reduce costs,which leads to the weakening of the cost stickiness of the companies.This paper takes the Social Insurance Law implemented in China in 2011 as the entry point,and uses the financial data of China's A-share listed companies from 2008 to 2014 to conduct an empirical analysis to study the impact of the implementation of the law on the cost stickiness of the company.The study finds that after the implementation of the Social Insurance Law in 2011,the company's cost stickiness decreased,and the weakening effect of the administrative cost stickiness is stronger than the sales cost.Further researches find that the cost stickiness of non-state-owned companies,companies with high average wages and companies in the eastern region is more significantly affected by the implementation of the law than state-owned companies,companies with low average wage and companies in the central and western regions.On one hand,the researches of this paper reflect the impact of the macro external environment on the cost stickiness of companies;on the other hand,it evaluates the policy effect of the Social Insurance Law from the perspective of cost stickiness,and provides empirical evidence for further improving the social insurance system.