The Analysis Of The Impact Of International Trade On China's Labor Shares

After thirty years of reform and opening up, China's foreign trade has expanded rapidly and dependence on foreign trade increases year by year, driven national income grew synchronousthly. But with the expansion of international trade, China's labor shares (employee compensation-GDP ratio) has decreased year by year, much lower than the labor shares in developed countries. According to international practice, the main indicators of the fairness which reflecting the initial distribution of national income is fair distribution rate, that means labor compensation, return of capital, government revenue occupied a reasonable proportion in national income. Serious decline in China's labor shares not match with the status that China's active integration into the world market and Chinese economy's steadily growth, also not conducive to China's future economic development. Study of the impact of international trade on China's labor shares has great practical significance.This paper reviews the domestic and overseas relevant research, based on the definition of labor shares to explain and select the calculation methods, statistical analyzing the status of China's labor shares. National data shows that with the expansion of the scale of international trade, China's labor shares decreased year by year; Regional data shows that the central and western region whose foreign trade scale are smaller, labor shares in these region are higher than the east place whose trade scale is larger; but the Midwest showed a faster rate of decline. Then this paper integrates Stewart Samuelson theorem, the descendants and the supplementary amendments of their theorems, and bargaining model of the influence of international trade on labor shares, summarizes the transmission mechanisms of the international trade influence labor shares. Under the premise of the theoretical analysis, this paper uses the panel data of 29 provinces (autonomous regions) from 1995 to 2007, taking the contribution rate of import and export as trade volume indicators, then using technological progress, capital deepening, the employment rate as control variables, empirical analyzes the impact of foreign trade on labor shares. The result shows exports and imports are not conducive to China's labor shares'improving, capital deepening and technological progress reducing the labor shares, fiscal expenditure promotes the increase of the labor shares. To highlight the regional differences on trade foreign trade's impact on labor shares, the sample is divided into high-level development group (Eastern Province) and the low development group (central and western provinces). Result shows that the impact of international trade on labor shares has significant regional differences. Exports improved the eastern region's labor share, but reduced the labor shares in central and western regions; import has negative effect on labor shares in China; capital-output ratio (capital deepening) improves labor shares in high-level development region, but deteriorates labor shares in low development region; technological progress is not conducive to China's labor share's improving; Expenditure increased labor shares, which play a greater role in the Midwest. Finally, policy recommendations are given based on the empirical results.