Impacts Of Rising Labor Costs On The Interfirm Productivity Dispersion

In recent years,thanks to the cheap and abundant labor advantage,Chinese manufacturing industry became competitive and achieved strong growth momentum.However,with the depletion of the demographic dividend and the orientation of policies,China's manufacturing industry is facing the challenge of rising labor costs.Affected by the heterogeneity of the enterprise,there are significant differences in the effect of labor costs on total factor productivity of enterprises.On the one hand,the higher labor costs has intensified the operating costs of enterprises,which in turn has shown a significant inhibitory effect on the improvement of corporate total factor productivity.On the other hand,the higher labor costs has improved enterprises to fully exploit the substitution of capital elements and the effects of technological innovation.There is a positive effect on the performance of corporate total factor productivity.Based on the above-mentioned practical problems,this paper studies the impact of the rising labor costs on the heterogeneity of total factor productivity from the perspectives of corporate capital substitution and R&D innovation,pointing out the “capital substitution effect” and “R&D innovation” caused by rising labor costs.The effect will increase the difference in the total factor productivity between firms by the difference in the productivity of high-productivity firms and low-productivity firms.Secondly,this paper constructs a technological progress model that includes the heterogeneity of enterprise productivity,analyzes the differences between capital substitution behaviors and R&D innovation behaviors of different enterprises after rising labor costs,and establishes the theoretical connection between labor cost and industry productivity distribution.In order to confirm the above theoretical inference,this paper firstly calculates the total factor productivity at the enterprise level based on the data of China's manufacturing enterprises from 1999 to 2010,and uses the panel data quantile regression method to test the labor cost to improve the total factor productivity of heterogeneous enterprises.Different effects.At the same time,based on the measurement of productivity differences between enterprises,the empirical analysis of the impact of labor costs based on industry.Finally,this paper makes a regression comparison between labor-intensive enterprises and enterprises in capital-intensive industries in China,trying to get more detailed conclusions.The empirical results indicate that the increase in labor costs has a more significant effect on high-productivity firms compared to low-productivity firms,which means that rising labor costs will increase the difference in total factor productivity among firms within the industry.In addition,the increase in labor costs has a greater impact on productivity differences in capital-intensive firms than in labor-intensive firms.Based on the above conclusions,this paper proposes scientific and feasible policy recommendations and measures from the aspects of improving industrial innovation,supporting policies,stimulating independent innovation capability and improving economic development system.