Regional labor administrative punishment and labor income share of enterprises

Abstract

Abstract Labor administrative penalty is a type of administrative penalty imposed by the labor security administrative department for violations of labor security laws, regulations, or rules. The intensity of labor administrative punishment varies across regions. How will regional labor administrative punishment affect the labor income share of enterprises? This paper conducts an empirical test on the impact of regional labor administrative punishment on the internal income distribution structure of enterprises. The study is based on theoretical analysis and data of urban labor administrative punishment in China, as well as samples of A-share listed companies in Shanghai and Shenzhen. The labor income share of enterprises is analyzed from a perspective of internal income distribution structure. The results indicate that regional labor administrative punishment significantly increases the labor income share of enterprises. Even after excluding endogeneity and robustness tests, the conclusion remains valid. Regional labor administrative punishment can improve the quality of internal control of enterprises through information publicity and deterrent effect. Additionally, it can reduce the credit risk of enterprises by stabilizing labor relations. Improving internal control quality and reducing credit risk can increase the labor income share of enterprises. Heterogeneity analysis reveals that the effect of regional labor administrative punishment on increasing labor income share is heterogeneous. The effect is greater for state-owned enterprises and enterprises with low entity investment levels.