Cai, JingHarrison, Ann2012-03-192012-03-192011-09-01https://hdl.handle.net/10986/3551This explores the impact of a tax reform in some provinces of China which eliminated the value-added tax on some investment goods. While the goal of the experiment was to encourage upgrading of technology, the results suggest that there was no evident increase overall in fixed investment, and employment fell significantly in the treated provinces and sectors. The reform reduced the total number of employees for all types of firms. For domestic firms, it reduced employment by almost 8 percent. The results are robust to a variety of approaches, and suggest that the primary impact of the policy has been to induce labor-saving growth. This experiment has since been extended to the rest of China.CC BY 3.0 IGOACCOUNTINGADDED TAXADDED TAXESADVERSE EFFECTSAFFILIATED ORGANIZATIONSANNUAL SALESBUSINESS ECONOMICSBUSINESS INVESTMENTCAPITAL ACCUMULATIONCAPITAL ASSETSCAPITAL INTENSITYCAPITAL INVESTMENTCHECKSCONSUMER SPENDINGCONSUMERSCORPORATE BEHAVIORCORPORATE TAXESCREDIBILITYDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDIVIDENDDIVIDEND TAXDIVIDEND TAXESDOUBLE TAXATIONDUMMY VARIABLEEQUIPMENTEXPENDITUREEXPORT SHAREEXPORTSFINANCIAL CRISISFISCAL POLICYFIXED ASSETFIXED ASSETSFIXED INVESTMENTFOREIGN FIRMSFOREIGN INVESTMENTFOREIGN OWNERSHIPFOREIGN SHAREFOREIGN SHARESFUTURE RESEARCHGDPINCOMEINCOME TAXESINSTRUMENTINTERNATIONAL BANKINTERNATIONAL ECONOMICSINVESTMENT BEHAVIORLIQUID ASSETSMANUFACTURING INDUSTRIESMARKET ENVIRONMENTNEW PRODUCTSOUTPUTPRODUCTIVE ASSETSPRODUCTIVE INVESTMENTPRODUCTIVE INVESTMENTSPRODUCTIVITYPUBLIC FINANCEPURCHASE PRICESALES TAXSMALL BUSINESSSTATE ENTERPRISESTATE OWNED ENTERPRISESTAX BASETAX BASESTAX CHANGESTAX DEDUCTIONTAX DEDUCTIONSTAX EXEMPTIONTAX INCENTIVESTAX PAYMENTSTAX POLICIESTAX POLICYTAX RATETAX RATESTAX REDUCTIONTAX REFORMTAX REFORMSTAX REFUNDSTAX REVENUETAX SYSTEMTAXATIONTOTAL FACTOR PRODUCTIVITYUSE TAXVALUE ADDEDVALUE ADDED TAXVALUE OF OUTPUTWAGESWorld Bank10.1596/1813-9450-5788