Research On Global Value Chains And Labor Income Share In China From The Perspective Of Heterogeneous Firm

After 40 years of reform and opening up,China's economy has made great development and socialism with Chinese characteristics has entered a new era.The major social contradictions have now turned into contradictions between the growing needs of a better life and unbalanced development.However,since the mid-1990s,the proportion of China's labor remuneration in primary distribution has been declining,which has become the focus of widespread concern in academia,government and society.The report of the 19th National Congress of the Communist Party of China clearly stated that "we must insist on keeping the increase of residents' income with economic growth synchronous,the increase of labor remuneration with labor productivity improving simultaneously".Therefore,the emphasis of China's Income Distribution Reform in the new era has become raising the labor remuneration and sharing the fruits of economic development.At the same time,China embeds Global Value Chain(GVC)relying on cheap labor rapidly and engages in low-value-added segment.In the long run,China must inevitably fall into the predicament of "low-end lock-up" and "impoverishment growth".So what is the impact of the GVC on China's factor income distribution,which the impact mechanisms are and how much the impact is?China's economy is now at a crucial period of transforming its mode of development,optimizing its economic structure and shifting its growth momentum.In the context of economic globalization,it is a new globalization strategy to promote China's entry into the high-end of the GVC.Therefore,this paper studies the effect of GVC on labor's income share in China,which helps to interpret the reasons for the declining labor income share in China and provides valuable reference for China to adjust the income distribution policy.Therefore,based on the reality of China's economic development and the heterogeneous perspective of firms' demand for labor skills,market choice and utilization of foreign capital,this paper studies the effect of GVC on labor's income share in China from the aspects on embedding level,integration method and division status of GVC.The specific research contents and conclusions are as follows:First,based on the heterogeneity of demand for labor skills,this paper studies the effect of GVC embedding on labor income share of Chinese manufacturing export firms.Under incompletely competitive products and labor market,theoretical models are used to analyze the influence mechanism of GVC embedding on labor's income share.The GVC embedding influences the labor income share through "markup channel" and "skill demand channel".The effect of skill demand channel is negative,and the effect of markup channel depends on rent distribution.When the rent obtained by labor is lower than a certain threshold,the markup channel has a positive effect on the share of labor income;on the contrary,it is a negative effect.Using China's Economic Census Data and China's Customs Trade Data in 2004 and 2008,Empirical tests show that the embedding of GVC suppresses the increase of the labor income share of export firms and this negative effect is closely related to the labor skills used by the firms.The "skill demand channel" and "markup channel" of GVC embedding have a negative effect on the labor income share of Chinese manufacturing export firms.Second,based on the perspective of market selection,we examine the effect of the integration of GVC on the labor income share.First of all,using the inference method of supply and demand information to estimate the quality of firms' export products,the competitive strategy of firms is depicted based on two dimensions of relative quality and relative price.Then,the paper discusses the theoretical mechanism of how the integration of GVC affects the labor income share,and uses the China Annual Survey of Industrial Firms,China's Customs Trade Data,BACI and WIOD database from 2000 to 2007 for empirical analysis.The results show that the quality competition has a greater impact on the labor income share than the price competition.The high-quality high-price and high-quality low-price strategies have a significant negative effect on the labor income share while the low-quality low-price and low-quality high-price strategies have positive effect.The higher the status of GVC in the target market,the lower the labor income share of export firms,and the status of GVC in the target market has expanded the negative effect of high-quality high-price strategy on the firms' labor income share.Third,based on the perspective of foreign capital utilization,this paper analyzes the effect of the firm's status of the GVC division on the labor income share.First of all,considering the "spatial distance" and "economic distance" of the GVC,we construct a non-equidistant export upstream degree to measure the status of GVC division based on the World Input-Output Table and China's Input-Output Table.Then,it uses the China Annual Survey of Industrial Firms,China's Customs Trade Data,China's Input-Output Data and WIOD Data from 2000 to 2007 for empirical analysis,and examines the role of FDI.The results show that the status of GVC division has a significant negative effect on the labor income share,which is mainly reflected in the economic value division of the GVC rather than the physical position division.The status of the GVC of foreign firms is lower than that of domestic firms.The vertical FDI and foreign capital trapped firms in "low-end lock-up",which suppressed the negative effect of the status of GVC on labor income share.