Common Prosperity, Family Businesses and Local Care
DOI:
https://doi.org/10.18533/azq86425Keywords:
Family Business,Shared Prosperity,Wage Differentials,Three-way GMM fixed effects model.Abstract
Family businesses hold a crucial position in China's economic landscape, yet uncertainties persist regarding the mechanisms through which they contribute to both internal and external local shared prosperity. This paper, starting from the mechanism of employee care in the production process within family businesses, employs a three-way GMM fixed effects model to empirically analyze the mechanisms of shared prosperity within and outside Chinese family businesses. The aim is to delve into the mechanisms employed by family businesses to reduce wage differentials among employees and the spillover effects of these differentials on external urban-rural disparities, forming a comprehensive understanding of the path through which shared prosperity is undertaken.The research findings indicate that, compared to non-family private enterprises, family businesses exhibit smaller wage differentials among employees internally. After controlling for cross-industry, regional, and yearly fixed effects, family businesses also demonstrate lower average executive labor income compared to non-family private enterprises. These results remain robust in the baseline model. Further analysis reveals that while family businesses do not exhibit a preference for excessive local investment, a 1% increase in local investment by family businesses effectively reduces local urban-rural income disparities by 3.14%–3.59%. Additionally, in prosperous regions with thriving family businesses, there is a significantly lower urban-rural wealth disparity. This paper clearly elucidates the relationship between family businesses and shared prosperity, providing compelling evidence that family businesses have a more significant spillover effect on regional shared prosperity through internal employee care. These findings not only offer new insights into the development of high-quality enterprises in the Chinese context but also contribute significantly to advancing family businesses' role in promoting local economic shared prosperity.
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