On The Study Of The Influence Of Wages Rise To China’s Labor Productivity

Wages and labor productivity are so important that both of them have long been concerned, and the level of them have significant effect on economic and social development. For a long time, depending on population advantage and providing cheaper labor, our country’s economy has achieved rapid development. However, relying on labor quantity advantage is not a long-term development strategy. Leontief paradox has shown that a country’s real competitive advantage of the labor force lies in the quality:higher quality of the human resources,more efficient productivity in working. Only the development of quality can be a real advantage, which will become a strong momentum in economic development.In recent years, both the standard and the frequency of minimum wages adjustment has been significantly increased. According to the published by ministry of human resources and social security, only in the first half of2014, about16parts of the country had adjust the minimum wage and the average adjustment by14.2%; At the same time, all sorts of compensating wage also rising. All of them indicates that the mechanism in low labor market of wage formation in China is rising in new period.Therefore, combined with the current situation in China, it is important and necessary to research the rising wages and labor productivity. According the west theory and research of scholars,that higher wages can lead to higher production efficiency. Then, in our country, whether the rising wages can improve labor productivity or not.To analyze the impact of wages rise on productivity, we followed the methodology of literature research and empirical analysis. Firstly,reviewing the relevant theories, and on this basis, through respectively researches on laborers and the enterprise to explain how the higher wages impact on the labor productivity. From the perspective of workers, higher wages will improve productivity by the mechanism of human capital, efficiency wages mechanism and output transmission mechanism;while to the firm, it will be played rely on cost reversed transmission mechanism. Then, we will research register units under different types of ownership and different regions, through analysis the characteristics of the time series of wage and labor productivity change to exploring the inner relation of them.As a result, we find that there exists positive correlation between higher wages and effective productivity and this conclusion also been confirmed by comparing with American. In order to further ensure the degree of influence we using the yearly data of average wage and labor productivity of1996-2012to modeling. Unit root tests of stationarity reveal that logarithm of all variables are integrated of order one-I(1) and confirmed that there is a long-term equilibrium relationship between them, the Granger test find that both to be able to explain the other side of the change, in other words,there exists causal relationship between average wage and labor productivity. At last,we use the generalized least squares (GLS) to estimate the regression equation and the result shows that the productivity with elasticity after wage increasing, and productivity increased by1.07%when wages increase by1%.It indicates that the steady growth of wages in China is an important premise of the improvement in labor productivity. Finally, we also put forward the corresponding recommendations.The main innovation of this paper lies in that different from the traditional analysis, we only analysis how rising wages to promote labor productivity which make the research more targeted; when discussing the specific mechanism, the paper expounds it respectively from both workers and firms; besides,we not only study the relationship between wage and labor productivity in China but also compared with international standard. Finally,in order to specific the affection degree, the article also construct simulation to further analysis by using the modern econometric analysis technology from which makes the conclusion more clearer and more reliable.The article just build model by using historical data and reveals that rising wages can promote on the productivity, however, lacking on the research about how the promotion mechanism will play in the further; In addition, since the mechanism of wages act on productivity is very complex that we only consider the relationship between the two of them will reduce its guidance function on the realistic.