The Impact Of Financial Repression On The Share Of Labor Income

For over 30 years of reform and opening-up,China has a great change of the social structure,elements gradually to mobilize resources,a series of remarkable achievements in various fields.There is no denying that,behind the huge achievements of the various levels of problems continue to emerge:economic growth slowing down,the industrial transformation and upgrading,livelihood issues,environment pollution and so on.Among them,the income distribution as the key problems affecting people’s livelihood is the focus of attention from all walks of life.From the perspective of functional distribution of income,declining labor income share in China has become an indisputable fact.Labor income share directly affects the change of the initial distribution of the society,social investment,savings and consumption,causing the academia to delve into falling labor income share.About the deep reasons of decline,the literatures have studied from the respective of industrial structure,technological progress bias,foreign investment and trade and other angles,but they may neglect the influence of financial repression.Financial have great impact on currency market and product market as the ubrain,9 of the economic operation.Government intervention in financial markets is bound to have an impolftant impact on elements of income share under financial repression policy run.In this article,the core problems that we explain are:"What are the characteristics of the fact that the labor income share and financial repression changes?" and "How does effect financial repression on labor income share?"and "What is the mechanism of conduction?"In order to explore the mechanism and transmission mechanism of financial repression on labor income share,this article comprehensively reviews the literature on the relationship between financial repression and labor income share and summarizes the existing research results.We use principal component analysis to measure the characteristics of financial repression in China and measure the labor income share of the industrial sector in 1999-2011 in China to explore the sources of variation.Then,the article discusses the transmission mechanism of financial repression on the share of labor income in Chinese industrial sector on the basis of the theoretical analysis and the construction of the model.The sample is divided into labor-intensive industries and capital-intensive industries for regression estimation to conduct empirical research on the basis of Chinese industrial sector 32 industry segments,observing the different influence of financial repression from the different factor intensive industry labor income share.Finally,the article summarizes the conclusions of the study,puts forward relevant policy recommendations,and points out the inadequacies of the study and further research directions.The study have found that financial repression exert an influence on the labor income share.Under the stimulation of the strategy of catching up and surpassing,the government is inclined to develop heavy industry enterprises to support the development of state-owned enterprises.They also subsidies the target industry development under the market price of interest rate and distorts the market price of the factor.It is not conducive to the improvement of the labor force’s ability to negotiate the capital in the product market.At the same time,the theoretical research shows that the degree of financial repression is inversely related to the share of labor income,the more serious the financial repression,the lower the share of labor income.The empirical study also proves the inhibition of financial repression.In addition,it is found that financial repression also has a significant negative effect on the industries with two different factors after the regression analysis of labor intensive industries and capital intensive industries.Based on it,this article puts forward some policy suggestions such as adhering to the financial deepening policy,the government balancing between total indulgence and strict control,improving industrial competitiveness and vitality.