| Abstract | The coverage of Chinese social insurance programs has been increased but slowly and firm’s compliance level keeps low. By using firm-specific data, we explore the incentive of participation in social insurance in manufacture firms from a perspective of cost-benefit analysis. Other things being equal, firms with larger size, higher human capital, less export dependency have higher real contribution rate and compliance level. SOEs have higher real contribution rate and compliance level, while private firms and FDI firms have lower compliance level. When dividing cities according to the prescript contribution rates, we found that lower human capital and export dependency have no effect in low-rate region, but have significant negative effects in middle- and high-rate regions. Private firms and FDI firms are not found lower compliance in low- rate region. Simulation shows reducing current contribution rate referred by policy will increase the incentive for participation and hence improve the financial balance of social insurance funds. |