The Analysis About The Change Of The Labor’s Wage Share In China

The experience of the developed industrialized countries reminds us that thedistribution of the income among classes kept constant in the long run, which is thestylized fact. On the face of the actual development from OECD, the labor share alwaysmaintained at about66%, which was known as the Kaldor fact, in1961.However in therecent years, the labor share in our national income distribution is low, which has beendecreasing since1995, meanwhile the production tax is basically stable, and the capitalincome has increased significantly. The phenomenon has aroused the widespreadacademic attention. Eventually the labor share is decreasing at a low level, but the capitalshare is increasing at a high level, which has been the basic consensus. But most studiesare focused on the macro-perspective and the inner reasons for the change are rarelyinvolved.The sample comes from the manufacturing company on market in china between1998-2010, the paper will account the share of labor wage, whether there is the sametendency as the macro-perspective says, and what’s more important, it will use theEconometric analysis to regress the related influential factors, analyze the underlyingreasons of the change. The eventual conclusion tells us: there is a marked decline of thelabor wage and salary, which is constant with the macro conclusion. The econometricresults turn out: controlling the related variables, the government revenue, the capitalincome and the labor-capital bargaining power affect the labor wage and salary share.That’s to say, when the labor lack the bargaining power, the capital-owner will pass thehigh tax and the capital costs on to the labor, making the labor wage and salary sharedeclined. In the conclusion, the common labor is the risk-averse, and lacks protection fromthe institutions, which cause the workers to the weak position, so that the governmentrevenue from the corporate income tax and the capital cost will squeeze the workers’benefits, which is taken as the major reason for the decreasing of the worker wage andsalary share.Lastly, based on the theoretical and empirical research, according to the analysis, thepaper put forward several suggestions to improve the situation, which will play a role onthe guiding the micro-enterprise to make the wage and salary situation better.