The Measurement Of Chinese Factor Price Disrtortion And Effect Analysis

Since the reform and opening up,China’s economic system reform has been transformed from the planned economy to the market economy,and the role played by the market in production factor allocation has been strengthened and widely affirmed.In the late 1980s,the price dual track system was phased out,and the distortion of China’s product market gradually improved.However,factor price distortions are still serious in the factor market.The reform of supply side in 2015 also requires us to eliminate price distortions in order to promote structural reform.What is the degree of distortion of China’s capital and labor factors?What is the degree of distortion of capital and labor factors in various regions of China?What is the economic effect of factor price distortions?Based on the relevant literatures at home and abroad,this paper studies the distortion of factor price.First of all,this paper starts from the distortion of the original definition,combs the differences between the price distortions and the distortions of the various elements of the factor market.It clearly shows the difference and relationship between the distortions of the factor market,the mismatch of the elements,the distortions of the factor prices,and made a detailed examination of the factor prices distortion.Secondly,in the measurement index,this paper combs the selection of different price indexes of capital and labor factors,compares and analyzes their advantages and disadvantages,and puts forward the quota method to measure the factor price from the national accounting point of view.Thirdly,study on measurement method,this paper discuss the commonly used methods of international and domestic factor price distortion measure,compares and analyzes the advantages and disadvantages,and finally select several production function methods to measure the degree of distortions of factor price in China,and introduce variable coefficient panel function to measure the price of different elements of the degree of distortion,compare the results of different production function model measures.Finally,based on the results of variable coefficient panel model,this paper uses the econometric model to study the economic effect of factor price distortion on industrial structure.Through analysis,the following conclusions are obtained:Firstly,the factor market is a broader concept,while factor price distortion and factor mismatch are the most important two core concepts in the formation of factor markets distortions.Secondly,the price of two elements measured by the share method is less than the factor price calculated by the non share method,but the relative size of the factor price calculated by the two methods is more stable,and the result of the share method is consistent with the existing research results,which shows that the factor price measured by share method is reasonable.Thirdly,there are obvious negative distortions in the price distortions of the capital and labor factors in the four production function measures,but there are slight differences in size,but the trend is consistent.In addition,the price distortion of various factors calculated in the national and regional data shows that the distortion degree of factor price is negatively distorted.In the early stage,the distortion of capital factor price in our country is more serious than that of labor factor price.In the later period,the distortion degree of labor factor price of our country becomes bigger until the distortion degree exceeds the price distortion of capital factor.Relative distortions show downward trend.The price distortions of various factors in different regions are different.The distortion of labor factor price in east,middle and west regions is on an upward trend.The distortion of labor factor prices in the eastern region is higher than that in the central and western regions,which fully shows that the marginal product of labor force in the eastern region is higher than its wage.There is a significant downward trend in the price distortion of capital factor in the east as well as in the middle and west region.The price distortion of capital factor in the west region is the biggest,the price distortion of capital factor is the smallest in eastern region,but the degree of distortion is increasing.This is because during the reform and opening up period,a large amount of capital was invested in the east and the output was high.Fourthly,the price distortions of capital and labor factors have negative effects on the rationality and higher level of Chinese industrial structure,and the price distortions of micro-elements will restrain the upgrading of industrial structure at macro level,which is consistent with the analysis of the economic mechanism of this paper.