The Impact Of Capital-biased Technological Progress On Labor Income Share

In the economic discipline system,the research on income distribution occupies an important position.With the continuous extension of the research depth and the continuous enrichment of the research content,the research on income distribution is now regarded as an important part for exploring the causes of national economic inequality and has attracted much attention by effects of the change of income distribution.In the past 30 years,China’s economy has made remarkable achievements,which is partly due to the spread of industrialization and information technology,which makes China’s technological progress more biased.Taking 2007 as a turning point,the share of labor income in China’s labor market showed an overall trend of beginning with falling and then rising.In order to explore the reasons,this paper studies influence of biased technological progress on labor income share and its formation mechanism from the perspective of biased technological progress and provides suggestions for formulating labor income distribution policies.Firstly,this paper selects Chinese provincial panel data from 1995 to 2018 as the research object,adopts CES three-equation production function supply surface system standard method,and uses nonlinear least square method to estimate technological progress index and factor substitution elasticity index at provincial level,and makes specific analysis,found that the level of the index of the provinces was less than 1,technological progress index is generally greater than 0,and most provinces in my country are capital-oriented technological progress.Then,from the perspective of empirical model,it analyzes the root cause factors of biased technological progress,expounds the causes of biased technological progress,and analyzes its impact on labor income share from three aspects: elasticity of substitution,relative efficiency of factors,and input scale of factors.Then,through empirical analysis,this paper concludes that the share of labor income will decline because of capital-biased technological progress.Further,this paper puts forward relevant hypotheses and conducts empirical analysis and finds that the share of labor income will indeed decline because of capital-biased technological progress.In addition,it is also found that the adjustment of industrial structure will also affect the labor income share.This paper measures the industrial structure through the upgrading of industrial structure and finds that the higher the upgrading level of industrial structure,the higher the labor income share will be.Next,this paper adds a square term to the model and finds that the effect of biased technological progress on labor income share is u-shaped,and the result is significant.Next,the robustness test is carried out in this paper.The first is the substitution variable method,and the labor share of the income method is taken as the substitution variable.The result model of the first term is not robust enough,which can be interpreted as the influence of taxation on it,resulting in a non-linear relationship.In the results of the quadratic term,the model remains significant,indicating that under the adjustment effect of tax,the share of labor income still maintains a "U-shaped" relationship with biased technological progress.In order to further ensure the robustness of the model,this paper adopted one-stage lag as instrumental variable,and applied2 SLS to conduct endogeneity test.After eliminating endogeneity,the model became more robust and significant.Based on the robustness of the model,heterogeneity analysis is carried out,and the samples are divided into time(2007 as the cut-off point)and space(economic development level).In the temporal regression,the one-time regression results before 2007 were not significant,and the rest were consistent with the previous conclusions.In the spatial division,the results of quadratic terms are all significant,but the one-time results are not significant.Then,this paper tested the threshold effect,the results show that the threshold exists and there is only a single threshold,technical progress effect on labor income share capital preference does not exceed the threshold value is negative,significantly more than the threshold value is also significantly negative,but more than the threshold value,coefficient of fell from1.073 to 0.0089,indicating that the influence level decreased after crossing the threshold value.Finally,in this paper,three suggestions are put forward.Firstly,appropriate imported technologies should be selected according to the natural structure of elements in China.In addition,further application should be made based on imported technologies.At the same time,innovation efforts should be intensified,and enterprises should be given sufficient space and rights for independent innovation.Second,the strategy of giving priority to the development of capital-intensive industries should be adjusted,and the development of digital economy should be enhanced to avoid excessive influence on the optimization and adjustment of industrial structure due to the development of heavy industry.Third,it is necessary to protect workers’ rights from the institutional and policy level and provide them with sufficient employment opportunities so that they can increase their income.Meanwhile,it is necessary to constantly improve the talent training mechanism and further accumulate more abundant human capital.