Amid mounting fiscal pressure and employment challenges in China, improving the efficiency and targeting of fiscal expenditure has become increasingly important. Local People’s Congresses (LPCs) are responsible for supervising government budgets. However, information asymmetry between LPCs and governments may weaken the effectiveness of supervision. The implementation of online budget supervision provides a quasi-natural experiment to examine whether strengthened supervision enhances the allocation efficiency of job stabilization subsidies.

Using panel data of China’s listed companies from 2009 to 2023 and a DID framework, this paper investigates the impact of the People’s Congress online budget supervision on firm employment. The study finds that the implementation of the People’s Congress online budget supervision significantly increases firm employment. Mechanism testing shows that online budget supervision improves the targeting of job stabilization subsidies, directing fiscal resources more intensively toward labor-intensive firms, small and medium-sized firms, high-tech firms, and firms in the secondary sector, thereby boosting employment. This effect is more pronounced in regions with higher fiscal pressure, lower fiscal transparency, and lower bank branch density. In addition, online budget supervision leads to a notable increase in regional employment, a higher share of labor income, and improvements in both operational and market performance of firms.

This paper makes the following contributions: First, it shifts the focus from the scale and composition of fiscal spending to the efficiency and targeting of fund allocation in explaining employment outcomes. Second, it offers a new perspective on how the informatization of budget management affects government expenditure efficiency. While existing research mainly focuses on compliance, structural rationality, and timeliness, this paper shows that online budget supervision enhances the targeting of job stabilization subsidies and thereby increases firm employment.

The findings carry important policy implications: Advancing the informatization of budget management and strengthening LPC supervision capacity can improve the precision of fiscal resource allocation. In addition, enhanced coordination between fiscal supervision and complementary policy instruments may help further stabilize employment.