Research On The Labor Share In China Since 1978

To promote everyone's welfare is the ultimate purpose of human development. Personal satisfaction with their wants and desires depends on the situation of income distribution provided that the amount of social total output is fixed; therefore the issue of income distribution has always been one of the major concerns in the field of economics research. In accordance with the long-term situation of factor distribution in developed countries, the share of productive factors had been relatively stable during a given period. However, the situation in China was considerably different and the range of variation was shockingly impressive:the labor share had shown a sharp decline, from 53.4%(1996) to 39.7%(2007), and the decline rate was 25.6 within 11 years.The inequity of primary distribution of the nation, especially the unreasonable labor income had influenced the sustainable development of macroeconomy in China, the social harmony, and stability. There are many problems related to this issue, for example, domestic effective demand is insufficient, the economic growth only relies on investments and exportation, the gap between the rich and the poor is widening, etc..This dissertation firstly made an empirical analysis on the changing trends and characteristics of labor share in China since the reform and opening to outside world. It shows that the changing characteristics of labor share in China is:1978-1986 steep rise,1987-1995 comparatively stable,1996-2007 sharp decrease.Secondly, it made a comparative research on the labor shares of some typical and representative countries. By the comparative analysis, it can be considered that the labor share of our country is unreasonable and on the low side.Thirdly, it empirically analyzed on the reason of the decline of our labor share by using multiple regression analysis. The conclusion is that the decline of labor share in China since 1996 is closely related to the labor's weak position and the dualization between urban and rural area.At last, the discussion on how to increase the labor share in the primary distribution was made and some effective solutions were provided. The given measures are as follows: strengthening the development of trade union and promoting the collective bargaining system, reasonably laying down the minimum wage standard and setting up the mechanism of regular adjustment of wage, improving the labor legal system and rigorously enforcing the labour law, creating more jobs and reducing unemployment rate.