The Study On Reversed Transmission Effect Of The Rising Labor Costs On Industrial Structure Upgrading In Guangdong

The economic development of Guangdong is more dependent on cheap Labor,although the industrial structure of Guangdong ranks a high level, internal efficiency of industrial structure gains relatively slowly. Since rising of labor costs leads to loss of low cost advantage, enterprises have to turn to product development and technological innovation, seeking the transformation and upgrading, so as to achieve upgrading of industrial structure by reversed transmission.Many studies use wages to replace labor costs simply, which ignoring the non-wage costs, and this article uses the wages and social insurances premium to measure the labor cost. The rising of Guangdong’s labor costs leads to changes of unit Labor costs in the department,and proportion of the departments in the economic structure is always changing. This study attempts to find the relationship between them. Results show that modern service industry, such as the financial and the real estate, have a advantage of Unit Labor Costs over agriculture, construction, and traditional service industry. According to the market mechanism, while the proportion of modern services gradually rise, agriculture, construction, and of traditional service industry gradually declined, so the rising labor costs will promote the upgrading of industrial structure. Then, this study collects and organizes the staff wages, social insurance, the capital and the proportion of the tertiary industry of Guangdong province. The author aims to explore the dynamic relationship between the labor cost and the upgrading of industrial structure of Guangdong province, by establishing the econometric models. The empirical results show there exists a stable long-term equilibrium relationship between them, and the rising of labor costs will also promote industrial structure’ adjustment and upgrade.In the end, based on the theoretical research and quantitative study, combining the actual situation of Guangdong province, Guangdong province suggestions are put forward to effectively promote the upgrading of industry structure from the reasonable rising of labor costs, efficient flowing of the labor force, the transformation of economic growth mode and direction of upgrading of industrial structure.