Effectsof Comparative Advantage Of Labor On Bias Of Technical Change

Comparative advantage is an important theory of region division of labor. Region which has comparative advantage to other areas is a region whose production factorshave lower price at same productivity or higher productivity at sameprice. Enterprises can use the factors at a lower cost to competewith enterprises of other regions, realizing the specialization of production. Lin et al.pointedout that compared with developed countries, China's abundant supply and low price of labor, the comparative advantage of labor is the important power to promote the development of China's manufacturing industry rapidly.Wage of Chinese manufacturesbegan rising rapidlysince 2003, Caiet al. pointed out that Lewis turning point has arrived, unlimited supply of cheap labor has passed, and enterprise's labor costs would be continuesly increasing. In order to cope with the situation, enterprises will reduce labor scale in the short term to improve the marginal productivity of labor and to maintain the comparative advantage of labor.In the long term enterprises try promoting technology progress to relieve the pressure on wage costs.There arenot only neutral technical progress, but also biased technical progress. Technical progress biased to a certain factor will enhance the factor's relative productivity and increase the use of this factor. Ricardo thought that enterprises choose technical progress biased to the factor whose comparative advantages is higher, but Hicks thought that enterprises choose technical progress biased to the factor which has a of rapid growthof comparative advantages.Some studies show that the technical progress of china after 2003 biases from labor to capital and other factor. But comparative advantage is a relative concept betweenregions, and on the premise of production factors' flow barriers.There are unbalanced regional economic development in our country anddifferent endowment and productivity of labor in different regions. In some areas there are labor comparative advantage relative to other areas. Maybe it is wrong to think that comparative advantage is turning to capital from labor and so as bias of technical progress.Simplicity, we assume that there are flow barriers of laborbetween regions, and other factors and goods can flow and trade freely in domestic. Supposing single factor comparative advantage theory in different areas, we analysis the level and trend of industries' comparative advantage and the direction technical progress bias to. Using data of manufacturing enterprises in different areas and industriesfrom 2003 to 2007, wetest whether baised technical progress was influencedby comparative advantage. This paper define the labor the ratio of productivity and wage(output of unit wage) as labor comparative advantage, define changes of labor's output elasticity astechnical progress deviation, respectively analysis their regional differences, and carries on the correlation analysis to find out influencefrom labor comparative advantage on technical progress deviation.Productionfunction in per capita is used to estimate parameters indextechnical progress deviation, based on data of manufacturing the micro enterprise andthree factors and stochastic frontier analysis. Compared with other similar analysis method there are advantagesfollowing: larger enterprises can be transformed to the position close to the median; adding intermediate input as a factor of production makestheestimates more matched hypothesis of new classical economics; the stochastic frontier analysis reflect the different technical efficienciesbetween enterprises and periods; alarge number of data and maximum likelihood estimation can get consistent estimates.This article respectively estimated enterprise production functionsand technology progress deviations in different areas and industries. So we can analysis their regional difference. The result shows that, in 2003 to 2007, manufacturing enterprises choose direction of technology progressby the effects of labor comparative advantage ofthe province and industry they belonged to. Enterprises choose labor-biasedtechnical progress if there are comparative advantage of labor, or they choose capital-biased or intermediate-biased technology progress. Choosing labor-biased technical progress, enterprises use more labor, alleviate the pressure job cuts. Many industriesin southeast coastal provences choice intermediate-biasedtechnical progress, and most industries in other regions choose labor-biasedtechnical progress.This article analysis the corelation between the change of labor scale and biased technology progress, and confirmthat enterpriseschoose biased technology progress to influence factors' scale adjustment according to labor comparative advantage. The conclusion shows that there are existence rationalityexplaining China's manufacturing area division by comparative advantage theory.