How China's Monetary Expansion Affect Share Of Labor Income

Income distribution has always been one of the core issues in economic discussions.The discussion of income distribution can be carried out from macro and micro perspectives.Macroscopic distribution problem is factor income distribution problem.As a measure index,labor income share has always been concerned by scholars.Most of the existing literatures discuss the long-term determination of labor income share from the perspective of economic fundamentals.By contrast,this paper discusses the impact of monetary expansion on labor share from a monetary perspective,which is more helpful to explain the short-term fluctuation of labor share.Based on the summary of relevant research,this paper discusses the impact of monetary expansion on labor income share from both theoretical and empirical perspectives.In theory,through stochastic pricing model and cost-plus pricing model,based on CES production function,the theoretical relationship between inflation,capital deepening and labor income share is deduced.In theoretical analysis,the relationship between monetary expansion,capital deepening,inflation and labor income share is discussed based on the SVAR model and the structural equation(SEM)model.The following conclusions are drawn: First,capital deepening and inflation are the main paths of monetary expansion affecting labor share.Generally speaking,monetary expansion has a negative effect on labor share.Second,inflation has a positive effect on the share of labor income in the short term.Thirdly,capital deepening has a significant negative impact on labor share and plays a dominant role in the overall impact.Fourthly,the long-term impact of monetary factors on labor share tends to zero.In view of the above conclusions,this paper puts forward the following suggestions: Firstly,the key to reduce the impact of monetary policy on labor share is to effectively reduce the demand price elasticity of capital elements.Secondly,the index of capital deepening can be included in one of the observed indicators of monetary policy,so that monetary policy can contribute to promoting balanced economic growth.Third,improve the industrial structure and market structure.The long-term impact of monetary policy on labor share tends to be zero,so labor share is ultimately determined by economic fundamentals such as industrial structure and market structure.