For fairness: Housing provident fund and enterprise labour income share

The Housing Provident Fund (HPF) plays a crucial role in enhancing residents’ housing affordability and promoting income distribution equity. However, existing research has not explored the effects of HPF on income distribution from a micro-firm perspective. This study is the first to investigate the impact of HPF on labour income share (LS) and income distribution fairness at the firm level. Using a sample of China’s A-share listed companies from 2008 to 2022, we empirically analyze the effect of HPF on firms’ LS and its underlying mechanisms. We find that the HPF significantly increases LS, with stronger effects in state-owned enterprises (SOEs), large firms, and firms with low financing constraints. These findings are robust across multiple tests. Mechanism analysis shows that the HPF enhances LS through an employment effect, factor substitution effect, and suppression of biased technological progress. Further analysis indicates that the HPF also narrows income disparities within firms, thus promoting more equitable income distribution. The findings of this study not only contribute to a comprehensive assessment of the socioeconomic effects of HPF but also offer a novel perspective on enhancing equity in income distribution.