Estimated Research Of The Capital-Labor Substitution Relationship In China's Construction Industry

Since the reform and opening up,China's construction industry has developed rapidly,but the growth model is relatively extensive.As labor costs increase and the economy enters the new normal of development,the optimization and upgrading of its industrial structure and the reasonable allocation of input elements have become the focus of attention.In an economic growth,capital and labor are the two major input factors,and their proportional relationship is constantly changing in the construction industry.From the perspective of factor substitution,this article hopes to explore the current situation,trends,and problems of capital and labor allocation in the production process of the construction industry.Firstly,based on the Constant Elasticity of Substitution(CES)Production Function Model and the Variable Elasticity of Substitution(VES)Production Function Model,using the construction industry statistics of Chinese 31 provinces(include municipalities and autonomous regions)during 1993-2018,the single equation estimation method is used to estimate the capital of Chinese construction industry-Labor elasticity of substitution,and to compare the applicability of the two model methods through empirical demonstration,and to analyze the current relationship between capital input and labor input elements of the construction industry.It is found that whose capital per labor(K/L)varies greatly is more suitable for the CES Production Function Model during the calculation period.The capital-labor fixed elasticity of substitution of the overall construction industry across the country from 1993 to 2018 was0.6128,and there was a complementary relationship between capital input and labor input factors.During the observation period,the development of the construction industry at the provincial level in my country is quite different due to geographical environment,population history,and other reasons.Although most of the construction industry in the northern region is in the stage of rapid capital accumulation,there is still a complementary relationship between capital and labor elements.In Southeast China and the Sichuan-Chongqing area,the construction industry mostly has the substitution relationship of capital and labor.And the direction of its substitution is the trend of counter-substitution of capital and labor in the economically developed and densely populated areas in recent years.Most of the regions' construction industries with diminishing returns to scale are located in the northern regions.Beijing,Tianjin,and Jiangsu,as regions with more mature development in the construction industry,have also experienced diseconomies of scale of the construction industry in recent years.Guangdong's construction industry has a significant substitution relationship between capital and labor factors,whose direction of the substitution was first begun to substantially replace labor with capital from 1996,and then entered a stable period of input factor structure from2006 to 2014.In recent years,there has been a trend of labor input replacing capital investment.Compared with the overall degree of substitution during the calculation period,the degree of replacement of capital and labor is slightly reduced in the later period.It shows that,with the expansion of the scale of enterprises and industries,enterprises paid more attention to the investment of high-quality talents and the optimization of management structure,which also caused a rapid improvement of the problems about the low quality of employees and management.Construction enterprises should pay attention to the optimal combination of input elements,accelerate the pace of technology research and its application,so that promote the industry to enter the stage of construction industrialization as soon as possible.