The Empirical Study Of Labor Costs' Duality Based On The Efficiency Wage Theory

There exists a heated debate on the impact of the labor costs'changes on enterprises. In this paper, the study will start from the characteristics of the duality of labor costs, then collate and summarize the efficiency wage theory, through the empirical study of the textile enterprises on the A share market, we explore the impact of the labor costs on labor productivity and profits in order to realize the effect of increased labor costs on enterprises.The analysis of criterion firstly studying on definitions and literatures, discussing the characteristics of labor costs'duality, summarizing the basic principles and theoretical models of efficiency wage theory, then giving a preliminary analysis of the theoretical effect of the labor costs'changes. Secondly, we study on the labor costs'status quo and trends of China, then use the unit labor costs of the industrial sector compared with major countries in OECD. We suggest that the production efficiency should be adopted to determine the level of the Chinese labor costs. Based on this, it is reasonable and necessary to increase the labor costs in China.The empirical part of the paper based on the theoretical framework of the changes in labor costs, building the main methods and modeling framework of the empirical study. Through the empirical study of the textile enterprises on the A share market using 2003-2008 data, we verify the relationship between the labor cost, production efficiency and profits, which confirmed the main points of the efficiency wage theory and the duality of labor costs. That changes in labor costs is not a single cost and profit performance for the zero-sum game, a win-win pattern may exist in labor costs between workers and employers.