2017
DOI: 10.1111/roie.12284
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Regional effects of export tax rebate on exporting firms: Evidence from China

Abstract: This paper extends a model from 2003 to separate the direct and indirect impact of an export tax rebate on the intensive margin of firm‐level export sales at the subnational level. The direct impact of the rebate is associated with a reduction of an exporting firm's variable costs, while the indirect impact manifests itself through higher regional wages as a result of increased demand for local labor. First, the empirical results imply that a 1 percent rise in the export tax rebate rate increases the export sa… Show more

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Cited by 10 publications
(9 citation statements)
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References 35 publications
(46 reference statements)
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“…Following Chandra and Long () and An et al. (), we use the province fiscal deficit rate of each province as an instrumental variable for ETR. Because of the ETR policy reform in 2004, local governments in China are required to share 25% of the financial burden of funding the rebates.…”
Section: Impact Of Etr On Survival Of Export Relationshipsmentioning
confidence: 99%
See 3 more Smart Citations
“…Following Chandra and Long () and An et al. (), we use the province fiscal deficit rate of each province as an instrumental variable for ETR. Because of the ETR policy reform in 2004, local governments in China are required to share 25% of the financial burden of funding the rebates.…”
Section: Impact Of Etr On Survival Of Export Relationshipsmentioning
confidence: 99%
“…Since China joined the World Trade Organization (WTO) in 2001, the ETR rate has been adjusted several times. For example, during the 2001 to 2013 period, the rebate rate for over 80% of the products at the HS6 level was adjusted (either upwards or downwards) at least once (see An, Hu, & Tan, ).…”
Section: Introductionmentioning
confidence: 99%
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“…As recorded in columns (3) and (4) of Table 6, the results show that the low-ETR rate significantly promotes quality improvement (Panel A) and the mediation effect of innovation exists (Panels B and C), while the high-ETR rate level no longer improves product quality (Panel A) and the mediating effect of innovation disappears (Panel B and C). As high ETR rate brings direct cost advantages (Chen et al, 2006;An et al, 2017), firms will no longer rely more on improving quality and investing in innovation. This finding further confirms that there is an inverse-U shaped relationship between ETR and product quality.…”
Section: Mechanism Analysismentioning
confidence: 99%