A Research About The Impacts Of Ownership Structure On The Labor Compensation Share

Since the founding of People’s Republic of China especially after the Third Plenary Session of the 11 th Communist Party of China Central Committee, China’s economy has achieved tremendous development and people’s living standards have been significantly improved. But on the other hand, from the early beginning of the 1990 s, China’s labor compensation share has declined obviously and stayed low for a long term. The great gap between the rich and the poor not only results in further injustice in income distribution, but also affects the economic development and social stability.Aimed at the reason for the decline of the labor remuneration share, mainstream economics believes it is related to the stage of economic development, industrial restructuring and technological progress. There are also some scholars who believe changes in the relative strength of labor and capital, such as inadequate protection of labor rights, the weakening of unions and the decrease of workers’ bargaining power, are the main reasons for the decrease of labor remuneration share.According to Marxist political economy, the mode of production determines distribution, so we need to analyze the change of income distribution based on the development and change of production relations. By analyzing changes in the ownership structure of our country since the reform and opening up, we find that with the deepening of marketization process, the share of public economy has been declining but the share of private economy has been increasing. In the private enterprises, all meaning of production for capitalists is to exploit surplus value from workers. With the degree of exploitation of labor by capital being strengthened, the labor remuneration share decreases. From this point of view, we believe that the change in the ownership structure of China is an important factor leading to the decline of labor remuneration share.To verify the theory, we carry out a theoretical and empirical analysis combined with China’s current realities and related data. First, we analyze the current exploitation of labor by capital based on the status of workers in the private sector, after which we find the degree of exploitation of labor by capital is deepened, and the relative wage level is declining. Next, we introduce the labor extraction model to carry out a theoretical analysis. According to the general set of labor extraction model, the amount of workers’ pay is actually the result of the game between workers and employers. The more loss unemployment causes, the higher the level of supervision by employers, and the larger the amount workers’ pay for the additional labor. After the analysis, we find that compared with public economy, there is a higher level of supervision under the condition of private economy, and the loss caused by the unemployment is more. So with the decline in the proportion of public economy, the labor remuneration share falls too. Then, we build an econometric model based on the existing theoretical model, in which we carry out an inter-provincial panel data regression estimation from 1993 to 2012 and find that there is a significant positive correlation between the proportion of public economy and labor compensation share. In summary, we prove that the decline in the proportion of public economy is indeed an important factor in the decline of China’s labor compensation share.In the end, we predict the trend of China’s labor compensation share combined with the current policy and the status of production.