Study On The Influencing Factors Of China’s Labor Income Share

In the western academia, the labor income share was thought to be constant just as the speed of light and was once regarded as the “stylized facts” of the economic growth.So the study of the labor income share didn’t get more attention.however, in late twentieth Century,the labor income share began to decreased worldwide,which was against the idea before and the scholars began to rethink the labor income share;In our country,with the reform and opening,we’ve made remarkable achievements,but according to statistics,the labor income was fluctuating,and what’s more,it decreased all the way down from 51.44% in 1995 to 39.74% in 2007. In addition, compared with other developed or developing countries(the labor income share of most of the developed and developing countries is in the interval of 55%-65%( Gollin, 2002)),China’s labor income share seems to be lower.We can’t help asking what kind of factors influence the labor income share of our country.To solve the questions above,we’ve studied the factors influencing the labor income of our country quantitatively and qualitatively and we’ve mainly analyzed how the industrial structure influence the labor income share.Firstly,this paper explains the connotation of labor income share and how to measure it;And then,we’ve reviewed the development of the theories about labor income share and the research status. Next, we’ve study the factors that have impacts on labor income share qualitatively and drawn our focus mainly on how the industrial structure influence the labor income share from the perspective of the optimization of the industrial structure and rationalization of industrial structure. On the basis of theoretical analysis,we’ve used the panel data of 30 provinces from the year of 1996 to 2012 and the method of SYS-GMM to empirically analyze the influence factors.According to the results,we’ve found that optimization of the industrial structure and rationalization of industrial structure are both benefit to the raise of labor income share.From the year of 1996 to 2003, the rationalization of industrial structure was declining all the time and it had negative effect on the labor income share.while during the of year of 2004-2012,the industrial structure became more and more rational which has positive effect on the labor income share.the optimization of the industrial structure was on the rise in the entire period of the study which indicated that the optimization of the industrial structure contributed to the increase of the labor income share.We also find out that the international trade is not benefit to the raise of labor income share which didn’t not meet the S-S theorem.It’s probably because that our export products locate in the end of globe value chain.The effect of FDI is not significant.Technical progress doesn’t have positive effect on the labor income share and it mainly because that the technical progress of our country belongs to the type of “labor saving, capital utilization”. Capital deepening and human capital accumulation are both not conducive to the increase of labor income share while the development of economy,the government expenditure and the higher degree of state ownership are all benefit to the raise of labor income share.At last,we think in order to make the exterior and interior of the industrial structure upgrade,we should encourage the introduction of competition mechanism and technology. We should support the development of the third industry,optimize the internal structure of the first industry and the second industry and condemn the enterprises which are low efficiency and resource consumption. and we should also optimize the export structure and improve the competitive advantage of domestic industry. And the government should optimize the expenditure on the economic construction to guide the adjustment of industrial structure.More government expenditure on the education,the technology and transfer payments is necessary.