Financial Development,Enterprise TFP And Labor Income Share

In the past forty years of reform and opening up,China's society developed very fast,economy has achieved rapid growth,per capita income increased steadily.But the contradiction is that since 1990s,China's labor income share continued to decline,capital and labor share growth in different proportions.How to make more people share the economic growth cake?This is a problem that academic circles always pay attention to.Firstly,financial market development is the key point of the relationship between macroeconomic environment and micro enterprise behavior.It is important to study the labor income share of micro enterprises from the macro perspective of financial development.Secondly,the study of the micro enterprise labor income share is difficult to take off the most essential enterprise production efficiency,some of the characteristics of the enterprise itself is no doubt will have an impact on the labor income share.This paper first reviews the relevant literature on the labor income share and makes a brief comment,and then from the theoretical research to find financial development and enterprises' TFP through what channels to impact on labor's income share,and from the empirical research to find some evidence of financial development and enterprises' TFP impact on the labor income share.Finally,according to theoretical and empirical analysis's conclusion and gives some policy recommendations to improve the income distribution pattern.This paper finds that financial development impact on the labor income share in theory mainly through three channels:one is the allocation of credit resources,the private economy has lower salary and welfare than the state-owned economy,but with the development of financial market,they gradually obtained more credit resources,so as to reduce the labor share of income;second is capital deepening,China's capital and labor are substitutes,capital deepening reduces the share of labor income;three is the enterprise's financing environment,financing constraints reduce the labor income share.And effect of productivity of labor income share in theory mainly through two channels:one is through capital biased technological progress,that is the labor saving technical progress,through the introduction of foreign advanced production equipment,rather than by raising the level of human capital accumulation,the result is that the labor income share is falling;another is through skill biased technological progress,by reducing the demand for unskilled labor and increasing physical capital reduced the labor income share.The empirical analysis of this paper finds that financial development and enterprise TFP are the important reasons for the decline of labor income share in China.The influence of financial development on the labor income share are difference indifferent regions.The eastern region showed a significant inhibitory effect,while the central and western regions may has positive effect.The impact of financial development on labor's income share in different ownership enterprises also exist differences:the state-owned economy has a smaller inhibition,while the private economy has a greater inhibition.The reason is that the state-owned economy is less difficulties of fund shortages,private economy is often faced with finance constraints.This conclusion was verified by the coefficients of the finance constraints,financing constraints on the state-owned economy is not significant,but for the economy of private ownership showed a significant inhibition effect.The reason is that the public sector of the economy are more likely to obtained funding from the financial sector.The impact of financial development on labor's income share in different resource dependent enterprises also exist differences:for labor-intensive enterprises showed a significant inhibition effect,the capital intensive enterprises has no similar conclusion.The reason is that the financing constraints of labor-intensive enterprises is greater than the capital intensive enterprises.Enterprise total factor productivity in various types of enterprises,all show significant inhibitory effect,the reason is that China's technological progress has capital bias and skill bias,this conclusion can be verified by the coefficient of enterprise innovation.Foreign-funded enterprises has minimum inhibition,second is state-owned enterprises,the biggest is private enterprises.The reason is that foreign enterprises pay higher wages to attract talent workers,and state-owned enterprise technology progress is minimum.Based on the previous theoretical and empirical studies,this paper puts forward the relevant policy recommendations:construction a good function finance market;improve the worker's skill and quality;break the monopoly mechanism enhance the competition;pay attention to the role of factors of opening up.