Risk-taking in gambling cultures and social security contributions – evidence from Chinese small and micro enterprises

Abstract

This study investigates the influence of gambling culture on corporate social security contributions, focusing on small and micro enterprises (SMEs) in China. Using data from the National Tax Survey Database for 2008–2016, this research posits that a prevalent gambling culture may foster risk-taking behaviors, which could negatively affect a firm's likelihood of contributing to social security. The negative impacts of a gambling culture are primarily driven by employers' incentive to reduce labor costs and employees' preference for short-term gains, along with their evaluations of cost-benefit trade-offs. The effects are more pronounced in regions experiencing rapid wage growth and in labor-intensive industries. The study also emphasizes education as a strategy to counteract these negative impacts of gambling culture. Furthermore, SMEs that evade contributions have higher ROA and TFP, but also experience increased staff turnover.