The Impact Of Globalization On Labor's Income Share

30 years of reform and opening up, China's macroeconomic aggregates grow rapidly, but in the process of economic development, structural contradictions and other problems began to appear. From the perspective of the national income distribution, structural contradiction reflected into distortions of distribution pattern. The change of labor's income share is a good example. Labor's income share decline in recent years in a row, from 53.4% in 1996 to 39.74% in 2007.The decline of labor's income share in the initial distribution of national income will affect all aspects of our economy, and bring in a series of social problems, such as intensified economic growth of low consumption and high investment, expand the community's income gap, and also increased government's social security burden. Clearly, the decline of labor's income share has become a hot issue. In recent years, many countries had the phenomenon of the declining share of labor income. With the deepening global economic ties, globalization had more and more important impact on national economies, including the impact on the labor income share. Inevitably, China has also been effected by globalization activities. Globalization has been an important factor that can not be ignored when we study the declining share of China's labor income.This paper study the determinants of labor income share with economic theory, and offer economic policy-making reference. This paper adds the global factors into the dual economy model, and entropy to construct global index which measures globalization. This paper analyze the influential factors of labor's income share of China with provincial panel data, and conduct the robustness test such as model set, sample size, variable selection. The whole paper consists of six chapters.The first chapter is introduction. This part analyzes the background and significance of this paper. In the background of declining labor income share and deepening globalization, the study of globalization on labor income share of China's influence is particularly urgent. The second chapter is literature review. The current research is pointed out through reviewing the foreign and domestic research, so it leads to the idea of this study.The third chapter is review of dual economy theory. This part studies the changes of labor's income share with dual economy model, then add global factors into dual economy model.The fourth chapter is the basic analysis of China's share of labor income. First, this part analyzes the concept and estimates of the labor's income share, and describe the overall changes of China's labor income share, and analyze the U-shaped relationship between China's inter-provincial labor share of income and level of economic development, then discusses the relationship between three industrial structure, intra-industry labor income share and the overall economic' labor income share.The fifth chapter is empirical analysis of decline of labor's income share. Firstly, this part estimates the decision model of China's labor income share with panel data, then conducts the robustness test such as model set, sample size, variable selection.The sixth chapter is the conclusions and recommendations. Based on the analysis of the first five chapters, the basic conclusions of this paper are:First, the combined impact of globalization on the labor's income share is negative, that is through various means, the globalization's employment effects is less than its labor productivity effect. Second, increasing capital per worker, capital-saving technological progress, absence of trade union when protect workers' rights and interests cause the decline of labor's income share, but workers' educational level and employment pressure is positive to the labor's income share. Overall, all these factors resulted in decline of labor's income share.There are two main innovations of this paper. First, this paper adds global factor into Lewis-Fei Han-Ranis dual economy model and use this model to explain our decisive model of the labor's income share. Second, this paper entropy to construct global index which measures globalization of China's provinces, and use this index to study the relationship between globalization and labor's income share. There are two deficiencies of this paper. First, the indicator system and method of constructing globalization index are further explored. Second, panel data model can not solve the interaction between different provinces.