Siirry sisältöön
  • Add to calendar
    Bank of Finland, Rauhankatu 19 B, Helsinki

Yongzheng Liu (Renmin University) - How do Tax Incentives Affect Investment and Productivity? Firm-Level Evidence from China


China initiated a major reform for capital taxation in 2004. Completed in 2009, it introduced permanent tax incentives for firms' investment in fixed assets. We use a quasi-experimental design and a unique firm-level covering all sizes of firms across a broad range of sectors and regions from years 2005-2012, to test whether the reform promoted firms' investment and productivity. We find that on average, the reform raised investment and productivity of the treated firms relative to the control firms by 38.4% and 8.9%, respectively. We also show that the positive effects tend to be strengthened for firms with financial constraints.


BOFIT seminars are open to all researchers interested in the subjects covered. Those wishing to attend a seminar are kindly asked to register in advance, by email bofit(at) or tel. +358 9 183 2268.

Seminars take place, as a rule, on Tuesdays, starting at 10.30 a.m. Visitors are escorted to the seminar room from the Rauhankatu 19 B (Library) entrance.