Social insurance reform and corporate environmental Investments: Evidence from China

This study examines the impact of social insurance contributions on corporate environmental investments, using a sample of 1,684 firms with 18,503 firm-year observations from China’s A-share listed companies between 2007 and 2019. Adopting a quasi-natural experimental design based on the 2011 Social Insurance Law in China, we employ a difference-in-differences model to analyze the effect of increased social insurance contributions. Our findings reveal that the increase in contributions prompts firms to raise their environmental investments. This effect is particularly pronounced for firms with higher labor intensity, located in regions with stricter environmental regulations, and led by politically connected CEOs. These results provide valuable insights into the role of firm-government interaction in shaping corporate environmental investment strategies.