An Empirical Test Of The Wage Cost Effect In China's "Mystery Of Service Industry"

At present,China's economic development has entered a new stage,ushering in a "new normal",with stable economic growth and continuous optimization of industrial structure.Among the three major industries,the tertiary industry has developed rapidly,far exceeding the primary and secondary industries,accounting for more than 50% of the gross national product,and is in the leading stage of industrial development.However,after a deep analysis of China's service industry,we can find that the share of service industry in GDP has not changed as we imagined.Compared with the trend that the share of service industry in GDP has increased year by year,the share of service industry in GDP has not changed.There is a " service paradox " in the optimization of the economic development industry in China.Baumol put forward the term " service paradox " in 2001.The service industry mystery refers to the problem of service price rising.There has been a study on price rising,which is caused by the relative decline of labor productivity in service industry.At the same time,regarding the price increase of the service industry,Baumol concluded that the rise in wage costs has led to a rise in the price of the service industry.However,under the unique “dual economy” structure in China,the increase in wage costs is relatively small.China has urban-rural divisions.There is a large supply of labor in rural areas.The supply of services in the rural labor force is relatively small,so the wage increase is relatively small.This paper uses wages as its control variable to analyze the impact of changes in wages in the service industry on the rise in the relative price level of the service industry.In order to explore the influence mechanism of wages on prices,this paper first combs Baumol and other related theories,and studies the mechanism of various factors affecting the price of service industry at the theoretical level.Secondly,based on the analysis of China's " service paradox ",this paper collects relevant data from various provinces in China,calculates the relative price level,relative labor productivity,relative wage level and the proportion of rural population of service industry and industry in the whole country and provinces from 2006 to 2017,and establishes a simple theoretical model based on the Baumol-Bowen effect and the Balassa-Samuelson effect.Based on panel data,this paper conducts an empirical study on the "service industry mystery" in spatial regions through econometric verification of the whole country and the eastern,central and western regions of China.The main conclusions of the study are as follows:(1)In the macro analysis,the service industry has more prominent price(cost)growth compared with other departments;after eliminating the price impact,China's service industry accounts for the share of domestic real GDP.It has remained stable,and the increase in the share of the service industry in China's nominal output value is mainly due to the rise in the price of the service industry.China has a “service paradox”.(2)In the micro-analysis,the changes in the wage levels of the two sectors are positively related to the relative productivity of the two sectors.From the perspective of economics,the relative rise in wages in the service sector has led to an increase in the price level of the service sector.At the same time,it also verified the problem of the price increase of Baumol's " service paradox ",that is,the rise in wage costs led to the rise in the price of the service industry.(3)Analysis shows that the proportion of rural population is negatively correlated with the impact of service industry prices.The increase in the proportion of rural population has led to a decline in the price level of the service industry.This is in line with China's unique dual economic status.A large number of migrant workers have flowed into the cities,and there has been a surplus of labor.The lack of fluency in labor surplus and wage transmission mechanism leads to unequal wage levels in the industrial and service sectors,thus inhibiting wage levels.Therefore,the more developing countries,the more likely they are to suppress wage levels because of the existence of rural labor,ie,migrant workers.Suppress price increases.At the same time,the influence mechanism of the Balassa-Samuelson effect under the dual economic structure of China was verified.(4)The study considers the development difference of spatial regions.From the spatial perspective,the relative price of the eastern region is greatly affected by the effects of production level,wage effect level and rural population proportion,which fully verifies the rise of wage costs in the mystery of China's service industry.The impact on the price of service industry and the transfer of rural labor affect the salary level and thus affect the price level.Similarly,the same economic impact is also present in the central region,but its impact is weaker than in the eastern region.However,due to the influence of geographical factors and humanistic factors in the western region,the measurement results between the relative productivity and the relative price of the two sectors are not significant.The wage level is not as significant as the relative price verification of the two departments.The problem is not significant in the western region.The innovations of this paper are as follows:(1)There are many literatures on Baumol theory in domestic and foreign research.The existing research in academic circles mainly focuses on the theoretical analysis and empirical test of the “service paradox” phenomenon in economic development.The research in this paper focuses on the research and analysis of China's " service paradox " phenomenon.Through the research on the development of service industry in China's economic development,the paper analyzes the impact of wage cost effect on service industry.In the discussion of the impact mechanism of China's "service industry mystery" and wage cost effect,using relevant panel data of various provinces and cities in China as data support,establishing an econometric model,analyzing the impact of China's wage changes on the relative price of service industry,Whether there is a " service paradox " in the stage of economic development,and how to deal with this problem and achieve sustained and stable economic development.(2)Introduce the regression of wage variables and rural population weights.China's large surplus rural labor force in the dual economy has caused a small increase in the price of service industries,which has dragged down wages.In the statistical research,wages are used as its control variables to empirically analyze the impact of changes in wages in the service industry on the relative rise in the price of services.