The Measurement Of The China’s Labor Income Share Based On The Agricultural Production Function

This paper focuses on the fact that the labor’s compensation of the primary industry contains the return from capital factor. By deleting the capital income in the labor’s compensation of the primary industry, we could measure the Chinese labor’s income share more accurately. And details:using agricultural production function to estimate the input factors’ contribution to output and then deleting the capital contribution in the labor’s compensation of the primary industry. According to the development of Chinese agriculture, this paper chose Translog production function and panel data of Chinese provinces ranging from 1993 to 2010 to estimate the Chinese agricultural production function. In consequence, the labor’s income share in agricultural sector estimated from the agricultural production function is about 47%-52% which is 35%-45% lower than that of the primary industry by the statistic data. Accordingly, re-measurement of the Chinese labor’s income share from 1993 to 2004 has been made. The empirical results of this paper show that the Chinese labor’s income share will be about 4-8 percentage points down.