A Research Of Decision Mechanism Of Factor Income Shares With Administrative Regulations

In recent years the decrease in labor share caused some concern in the community and academic circles, and be regarded as the root of the widening income gap, the social problems and mass disturbance. And it is important to discuss the factor shares during the transformation of China economic system, given that the income gap is always accompanied with economic transformation. One of the characteristics of the transformation is that the enterprises under conditions of both market and administrative regulation inherited from the planned economy, which makes the research of factor shares in China hard and having no precedent. This paper considers the hiatus of influence studies in administrative regulation and factor shares, and takes the influence of administrative regulation on factor shares as the perspective. For this purpose, we structure a production function that can straighten influence of administrative regulation on factor shares, and then test it.Drawing on the basis of previous studies, we begin our study with quantitative modeling analysis and empirical analysis. Our paper combines with the characteristic of administrative regulation, structuring a production function with permit administration, building a factor share model of different market structures. We discuss the influence of administrative regulation on factor shares with the factor share model and numerical simulation. By providing the hypotheses according to the result of modeling analysis and numerical simulation, we chooses the proxy variable to test hypotheses, hoping that my crude remarks may draw forth by abler people for researching the factor share under the transformation of China economic system.This dissertation comprises seven chapters. In chapter1, we reviews the background of reality and theory research, addresses the existing gaps, and puts forward the research questions and technology roadmap; Chapter2traces the history of factor share, administrative regulation, market structure and administrative barriers; Chapter3analyzes the advantage of VES production function on observing factor shares over the other production functions, and adopts the variable of administrative regulation to discuss the effect of different setting on factor shares; Chapter4and Chapter5derive the mechanism of effect of different market structure on factor shares both product market and factor market, and discuss effect degree on the factor shares, of price elasticity of demand, percentage of the factor inputs and elasticity of supply; Chapter6uses descriptive statistic to describe the current condition of China’s administrative regulation and factor shares, and then, uses inter-provincial panel data from2003to2010to test the impacts of administrative regulation on the factor shares; Chapter7concludes the research and discusses limitations and suggestions for future research.The theoretical analysis part mainly discusses the effect of different market structure on factor shares both product market and factor market within the framework of VES production function which embeds administrative regulation as a variable. The results of theoretical analysis and numerical simulation show that as the market structure of perfect competition changes into monopolist, the ratio of residents’competitive factor share decreases step by step. The concrete features are that:(1) when factor market is perfect competition, the higher the monopoly of product market, the lower factor share of capital and labor, and the higher monopoly rent share of enterprise;(2) if consider the administrative regulation, the higher the administrative regulation scale, the higher administrative monopoly of product market, the lower factor share of capital and labor, the higher administrative-monopoly rent share of government, the relatively lower monopoly rent share of enterprise;(3) if product market is administrative monopoly, when factor market is from "exclusive regulation" transforms to "impose regulation", factor share of capital and labor is lower, and administrative-monopoly rent share of government is higher.In the part of empirical research, the paper uses248samples of inter-provincial panel data from2003to2009to test the hypothesis. The results of our empirical research indicate that:(1) as the administrative regulation scale increases, the ratio of residents’ competitive factor share decrease;(2) the impacts of administrative regulation on capital and labor are different, register as capital share is declining faster than labor share with administrative regulation scale increasing;(3) the human capital has a significant positive influence on labor earnings;(4) the growth of the percentage of the third industries in GDP contributes to the residents competitive factor incomes, by increasing the supply elasticity of residents competitive factor.The paper puts forward the VES production function with administrative regulation as a variable, clarifies the influencing factor of capital share and labor share under different market structures, and also the influence mechanism and influence degree, then test the effect of administrative regulation on the factor share. The study also gives a new angle of view of understanding particular phenomenon during the transformation of China economic system, ex. substituting low-skilled labor for capital may bring declining of labor share; the low proportion of residents property income which brought by the asymmetrical marketization in factor market may cause the income gap, etc. The dissertation also sets out the limitations of the study and its practical implications, and makes some suggestions for future research.