The Measure And Analysis Of Biased Technical Progress-Based On The Province Data

Since the reform and opening up, the labor income share of the whole output is decreasing in almost all the provinces. This paper constructs a neoclassical economic model based on the CES production function, uses the 29 provinces data over period 1990 2012 to measure the biased technical progress and gets the elasticity of substitution, labor efficiency and capital efficiency of each province. The result indicates that the elasticity of substitution is between 0 and 1 and its mean is 0.49. The elasticity of substitution of East, Mid and West region is different which is related with the regional economic situation. This paper also tests the correctness of the De La Grandville Hypothesis. For Beijing and Shanghai, the technical progress is biased in favor of labor. For the other regions, the technical progress is biased in favor of capital. From the national wide aspect, the mean labor augmenting technical progress of all the provinces is about 10.36%, the mean capital augmenting technical progress of all the provinces is about 0.36%. From the provinces aspect, most developed provinces’ capital efficiency is below 0 and some developing provinces’ capital efficiency is beyond 0. It indicates that after the reform and opening up, different regional policies and the local conditions cause the differences of the capital efficiency between all the provinces. After the comparison of the fluctuation labor income share and the type of technical progress, we find that the speed between the capital deepening and the augmenting of labor efficiency is the reason of the fluctuation labor income share in recent years.