A Study On The Effects Of Budgetary Revenue Level On Labor Income Share In China

Recent years,more and more domestic and foreign researches have challenged on the “Kaldor Stylized Facts” that the factor income share is constant,and empirical analysis results show that the labor income share has generally declined throughout the world.According to data from the National Bureau of Statistics,the labor income share in China has fallen by 13.51 percentage points since the middle and late 1990 s,which worsened the national income distribution and threatened the healthy and sustainable development of society and economy.Therefore,it is of great significance to analyze the change trend and the determinants of China's labor income share,thus to improve the existing pattern of income distribution and promote the steady and healthy development of economy.Based on the perspective of budgetary revenue level,this paper analyses the factor income distribution,which thinks that the rise of budgetary revenue level reduces the labor income share in China.On the basis of reviewing the existing literatures on the labor income share,this paper deeply analyzes the related concepts of labor income share and budgetary revenue,then expounds four mechanisms that budgetary revenue level has effects on the labor income share:(1)The increase of tax and fees directly lowered the share of labor and capital;(2)The tax and fees cause factors substitution.Under the target of profit maximization,enterprise will use capital to replace labor,thus resulting in lower income share of labor relative to capital;(3)The income effect and substitution effect of taxation shall affect labor supply.And the relative size of the two effects determines the influencing direction of budgetary revenue level on labor income share;(4)There is a possibility that tax will be transferred between the factors,so labor and capital will not bear taxation in a proportional manner,resulting in a reduction in the relative share of the capital to labor.Using the data of Income Approach Components of Gross Regional Product from 1994 to 2016 and Budgetary Revenue from 1978 to 2016,this paper analyses the change trend and regional differences of labor income share and budgetary revenue level in China.China's labor income share has experienced the U-shape change that it starts to increase after a decline over the past two decades,but the budgetary revenue as a share of GDP and the per capita budgetary revenue have been rising at the same time.In addition,China's labor income share and budgetary revenue level have significant regional differences.The empirical analysis of this paper uses the balanced panel data of 31 provinces in China from 1997 to 2016 to examine the influence of the budgetary revenue level on the labor income share.The Pooled OLS Model,the Fixed Effect Model and the Random Effect Model results show that:(1)The budgetary revenue level has a significantly negative impact on the labor income share;(2)The proportion of tertiary industry and actually-used foreign direct investment significantly and positively influence the labor income share;(3)The effect of foreign trade,capital deepening and technological progress are remarkably negative.These conclusions all above are still established when carrying out the robustness test with the time division,the region division and the replacement of explanatory variables.Lastly,based on the above research conclusions,this paper come up with some policy suggestions to improve the labor income share and the distribution pattern of national income:(1)To deepen the reform of fiscal and taxation systems and to optimize the structure of budgetary revenue;(2)To advance the industrial structure and to develop the tertiary industry;(3)To optimize the structure of foreign trade and to take advantage of the resource endowments;(4)To develop science and technology as well as education,so as to cultivate high-quality and diverse talents.