The Research Of The Influence Of Opening Up On The Labor Factor Rewards

Today, Economic globalization is an irreversible trend in the world, but with the increase of openness, the income of different production factors within a country is also changing. One of the major manifestation is that labor and capital reward gap expand. Since manufacture is the most active fields in China, the import and output of manufacture is growing fast, and FDI also intends to flow to industry, so I use the manufacturing sub-industry panel data from2000to2011to study the relationship between opening and labor reward. The paper is structured as follows:First, the paper briefly introduces the purpose, significance, and methods of this research.Second, based on a review of the relevant literature and theory at home and abroad, this paper finds out some research gap in the existing researches.Third, this paper makes statistical analysis on the openness degree and labor rewards in China’s manufacturing industry. The openness degree is demonstrated by the current situations of trade, FDI and outsourcing; and the labor factor reward is demonstrated mainly by industry average wage and labor share the industry average wage to the industry added value.Fourth, the relationship between the degree of opening and the labor factor rewards has been theoretically discussed. And then using the theoretical models, this paper studies how the labor rewards be affected by trade, FDI and outsourcing. According to the models, trade can affect the labor rewards through the relative demand for different factors of production; FDI mainly affects the labor reward through technological spillover effect; outsourcing then affects the labor rewards by the demand for different labor elements. These theoretical analysis can effectively support the empirical research later.Fifth, this paper uses the manufacturing sub-sectors data from2000-2011to examine the relationship between opening and labor reward. The explaining variables include trade, FDI and outsourcing. Furthermore, in order to give a more complete cognitive framework, the per capita GDP and the capital-output ratio are chosen as control variables.Sixth, this paper gives some policy suggestions based on the theoretical analysis and the empirical test before. The empirical results strongly validate the hypothesis proposed in the theoretical part, regression results show that opening has impact on labor rewards, and in the cases of different types of industries the impact varies. Thus, this paper presents relevant policy recommendations, considering that China should adhere to opening up, vigorously develop trade and outsourcing business, and attract foreign investment reasonably, thereby increasing the absolute and relative value of labor, transferring the development mode based on labor-intensive products, improving labor productivity, and enhancing the country’s competitiveness.