Labor Share Decision:An Integrated Theoretical Model And Its Verification

The distribution of factors,especially the share of labor income,has become a research hotspot in the world again.The literature argues that economists have recently used labor share as a factor in understanding the aggregate production function,and labor share has become an important parameter in many fields such as macroeconomics,growth theory and international economics.The imbalance of economic structure caused by the high investment rate of the whole society in recent years,including the imbalance of the supply side and the imbalance of the consumption side,make the in-depth study of the factor share become very urgent.Studies have shown that the capital return rate is always inclined to higher than the economic growth rate historically,that is,compared to the capital share,labor share is bound to continue to decline.As the decisive mechanism of the initial distribution,income share has a central impact on consumption and investment.And thus,the theoretical assumptions and basic framework of factor share are essential analytical basis in the enterprise micro and aggregate production function selection,wage and employment theory,technological progress and economic growth,macroeconomic policy choice and many other aspects of research.Based on the above analysis,this paper intends to explore in the following areas in order to achieve the relevant research purposes:First,China's 30 years of high-speed non-balanced development and government-led,high growth rate of social investment has been closer to the critical point of marginal effect.China's macroeconomic structure is into ubiquitous structure imbalance in the developing economies.More than 30 years of export processing trade economy of the domestic factor market and international product market has undergone tremendous changes,that is,the growing international trade surplus makes the international trade environment deteriorating from the major trading countries' trade protection and trade boycotting.The domestic processing trade with low-cost labor force and path dependence has gradually lost relative comparative advantage in the case of rapid domestic labor costs.Therefore,how to explore the balanced development path of economy has become an important problem in the new period based on the factor income equilibrium.Second,since the long-term growth of residents' income is slower than the overall economic growth,the consumer economy has not been able to dominate the overall growth for a long time.The increase in national welfare and the sustainability of economic growth are two aspects of the problem.China's consumption downturn in recent years is not usually the result of the increase in household savings,but from China's share of labor income and the proportion of income reduction,which is contradictory to the fundamental goal of economic development,which is to seek national welfare.It is an important research direction of this paper to increase the proportion of labor share from planning relevant policy recommendations both theoretically and empirically.Third is to find core elements of elements allocation in specific theoretical and empirical analysis.The benign operation mechanism of factor allocation depends on the effective cooperation of many basic factors,including the initial path and institutional change.The core problems in China include the non-market distortions of state-owned capital and state-owned enterprises,and the obstruction to labor element mobile and equitable market-oriented pricing from urban and rural dual household registration system,as well as local government intervention on regional markets and local economic non-market and other issues.These problems have a significant impact on both the factor market and the product market,and there are also significant obstacles to the new economic policy orientation of ?making the market as a decisive basis for resource allocation?,particularly in distorting the price and allocation of factor markets from getting a long-term balanced development path.In order to obtain the long-term balanced development of the national economy and accomplish the growth of the national welfare promoted by the increase of the social wealth of the economic growth,it is necessary to find the practical problem-solving path based on the factor distortions.Fourth,since the reform and opening up,a series of policies and legislation have been introduced in an attempt to adjust and optimize the distribution pattern of income.However,the overall effect is weak.As a public adjustment variable,government revenue not only failed to effectively change the distribution pattern,the rapid growth of government revenue even played a weaken role in labor incentives in some extent.Therefore,a comprehensive analysis of the government's comprehensive policy system and seeking the impact mechanism from theoretical and empirical analysis are essential to offer constructive views to eliminate economic development policies and distribution policies.In terms of research methods,the framework adopted in this paper is the basic path of "phenomena and problem description-theoretical model construction-empirical measurement and analysis".At the level of problem and phenomenon,this paper focuses on the historical changes of labor share in China,and finds out its overall evolution characteristics through sub-regional and sub-periods.At the same time,it is calibrated and referenced by international comparison to analyze the inherent laws.In the aspect of theoretical model construction,taking the neoclassical economics as the basic analysis frame,this paper starts from the micro-production function,and deduces the overall labor share decision equation,then pays attention to the influence of implicit variables in the layered deduction.In the empirical analysis,this paper mainly uses the panel data model based on Hausman test and Wlad test,including fixed effect and random effect analysis,and taking the mixed OLS as the most robust reference model,and then takes a robust processing of sequence of heteroscedasticity,smoothness and collinearity.Specifically,this article is divided into seven chapters.The first and second chapters,the "Introduction" and "Labor factor share of the measurement,evolution and practical problems",are part of the phenomenon and problem description.Chapter three,?Comprehensive theoretical model for determining the labor share factors? is a comprehensive theoretical construction of the factors affecting labor share.Chapter four,"The source and measure of the core explanatory variables",and the fifth chapter,"the empirical analysis of the labor factor share ",are the empirical analysis of the factors affecting the labor share.The sixth chapter "a number of expansion study of the labor factor share" makes an expansion study of impact on the labor share from government tax,wages and employment,labor heterogeneity.The seventh chapter is the research conclusions and prospects.The following are simple summaries:In the second chapter,the Chinese and foreign literatures on the data measurement methods and results of the labor share are firstly reviewed,and then a comprehensive measurement program are put forward.The quality and the reliability of the statistical data are comprehensive balanced.And the results are compared to the existing literature to ensure its robustness,so as to provide a solid foundation for the follow-up empirical analysis.Based on the actual data,the dynamic evolution analysis is based on the "convergence-divergence" analysis framework.On the basis of the description of the actual phenomenon in the second chapter,this paper constructs the core part of this paper-the third chapter "comprehensive theoretical model of labor factor share decision",and based on the theoretical hypothesis of the third chapter,in the subsequent fourth,fifth and sixth chapters carry out the comprehensive econometric analysis.Chapter four analyzes the three affecting elements of the labor share,which are distortions of market share,technological progress and monopolistic competition.In the fifth chapter,using the metrological regression,the labor share of the economy and the tertiary industry are verified respectively,and get a consistent result with the theoretical expectation.In the sixth chapter,several key issues that have not appeared in the basic theoretical equation are studied,including the influence of government taxation,the decomposition of labor share in wage and employment,and the labor heterogeneity effect from the core proposition of division of first and second class labor market.The basic research conclusion of this paper is as follows:In the theoretical model,the main factors affecting the labor share are three core factors,and other factors are more or less indirectly affected by these three factors.First,in the enterprise and industry level,monopoly competition strengthens the share of capital income,while reduces the share of labor income.Second,the twist factor contains a variety of factors,and basically is divided into market share distortions and product market distortions.The former is divided into distortions of capital and distortions of labor.The basic conclusion is that the positive elements of labor distortions basically correspond to the capital negative distortions,and are both conducive to the relative labor share on the capital rise,and vice versa the same conclusion.Product market distortions,due to the reduction of the maximum output of the manufacturer,are generally favorable for the relative increase in the share of labor,which is detrimental to the share of capital.The third part is about the impact of technology-related factors.Technical progress on the impact of labor share depends on elasticity of substitution of labor capital attribute,if alternative elasticity is less than 1,and elements are with a complementary relationship,the labor bias technical progress and the labor share is in a reverse relationship,and in a positive relationship with the capital share,vice versa.In terms of factor input,capital-to-output ratio and labor-output ratio have an impact on labor share,with capital-output ratio playing a dominant role.The basic conclusion is that when the factors are complementary,the capital output is positively related to the labor share,and the opposite is true.In this case,the elemental substitution elasticity is a key intermediate variable,which determines the influence of many influencing factors on the share of labor and capital elements.Most of the empirical results of this paper clearly confirm the theoretical hypothesis,such as,if alternative elasticity is less than 1,labor output ratio,labor bias technical progress are in a reverse relationship with labor share,and the human distortion of elements didn't bring the desired result.The empirical analysis proves that the monopolistic competition is inversely related to the labor share.The scope of empirical analysis is more than the theoretical hypothesis,mainly because of in the distorted reality analysis,the theoretical system is difficult to completely endogenous,or can not describe the reality of a good description of the situation.In order to comprehensively clarify the share of labor,multi-faceted empirical study of labor share are accomplished,including the real evolution analysis of labor share and wage employment two points of view on the actual impact of labor share effect.The basic conclusion of this part is that China's labor share has a weak divergence trend in various regions,and each has its own characteristics in sub-industry and sub-sectors,and the empirical view holds a positive attitude towards the systematic rebound in labor share in the near future.Because of the various distortions in the process of transition and the price of the factors,the wage and employment have different effects on the labor share.Due to the lack of elemental elasticity,the positive distortions of wages and employment will produce the opposite effect,and the naturalization of the market will help to enhance the share of labor.In addition,the impact of government tax,in the past tax system,on the factor share is non-neutral.If the tax is taken as a factor of the distorting force,the improvement of the corporate income tax will be a negative distortion on the capital,and may help the increase the labor share relatively.However,that will be detrimental to total output,and thus will also have a negative impact on the absolute amount of labor factor income.In the aspect of policy,this paper generates three suggestions through theoretical and empirical research.First,the liquidity of the factors should be improved rapidly in the economic operation,including the flow between regions,the flow between industries,the flow between different ownership enterprises and the market.On the one hand,it helps to reduce the transaction costs of economic development,thus promoting growth,while on the other hand,it will help improve the share of labor and thus promote the long-term balanced development of the economy.Second,the policy should be based on scientific analysis and judgment,can not be simply and subjectively spoil things by excessive enthusiasm,such as artificially raise labor prices,with the intention to improve the situation of workers,and the result of the reducing of overall income share of labor.Third,respect the market decentralized decision-making power.The allocation of resources led by government will produce all kinds of distorted problems,and is difficult to return.But decentralized market decisions will automatically correct various distortions,and is conducive to long-term healthy economic development.