Reasrch On Financial Repression And Labor Income Share In China

Since reform and opening, Chinese economy has maintained rapid growth, get fruitful development. At the same time, there are many problems, such as the income gap increases, industrial structural transformation begins, economic growth begins to slow down and so on, undoubtedly one of the most intractable problems of income distribution, hinder the national economy increase prominently and affect social stability harmony. Domestic and international economic scholars are of great concern on Chinese labor income share decline and take research on Chinese labor income share, achieving fruitful achievement, summing up the current research literature, scholars focuses In three angles for the labor income share research:the industrial structure adjustment theory; technical bias theory; theory of monopoly profits. However, the above theory cannot fully reveal the real reason for the decline in the labor share; its policy implications are rather ambiguous. In recent years, more and more scholars began to notice the relationship between financial depress and economy, financial repression means taking mainly deposit and lending rates to limit credit control, statutory reserves and control of real interest rates, the government will allocate a larger share of low-interest loans to the state-owned sector of the economy, and areas of government investment mainly concentrated in capital-intensive industries or state-owned economic sector, it absorbs the limited employment, and is not conducive to labor income share increase.Based on the above ideas, this paper resort the induction of labor income share of the theory and financial repression literature, it aims to fully find the relationship between financial repress and the labor income share. Firstly, we build a theoretical model to qualitative study its inner mechanism between Chinese financial repression and labor income share. Secondly, reconstruct labor income share influencing factors empirical model to explore the inherent association between them from the empirical point of view, which is to make up for the previous financial measurement,in this paper,we take the main ingredient France from 1993 to 2012 to measure the degree of suppression of China’s financial, in addition, because China in 2004 occurred statistical data have been adjusted to maintain the continuity of the data, this paper Chinese inter-provincial labor income share certain amendments.This study found that financial repression will significantly inhibition of labor income share increase, but the eastern, central and western regional exists differences to financial repression effect on labor income share, the eastern region affection of financial repression was significantly lower than the central region on labor income share, the western region financial inhibition of labor income share did not show a significant effect. In addition, investment in human capital, openness and capital intensive there is a significant negative effect on labor income share, industrial structure adjustment and the urbanization process will help to improve the labor income share. This paper further studies to inhibit China’s financial sources, the discovery and partial catch-up strategy of state-owned economic structure is the root cause of Chinese financial repression, it has an important significance, exploring effective path for rising Chinese labor income share. This paper argues that in order to improve the share of labor income in China, there is an urgent need to strengthen financial reform and change in development policies, improving the ownership structure, continuing to deepen reform and opening, promoting the optimization of industrial structure adjustment.