Study On The Impact Of Labor Cost On Labor Productivity In China

Since the fortieth anniversary of reform and opening up,the country’s economic development has made rapid progress.The reason behind it can be found that the lower labor cost is an important support for China’s rising economic level.With abundant cheap labor resources,China has rapidly entered the international division of labor system and become a "world factory".Cheap labor force has played a great role in promoting economic growth and development.The labor cost began to increase rapidly after 1998.In 2004,the problems of "difficulty in recruiting workers" and "shortage of migrant workers" appeared at the same time,and the increase of labor cost was increasing.The continuous rise of labor costs has aroused people’s concern,then,how will the rise of labor costs affect the economy? The essence of evaluating the impact of rising labor costs on economy lies in judging the impact of labor costs on labor productivity.With the gradual disappearance of the "demographic dividend" in our country,under the realistic background of the transformation from "demographic dividend" to "talent dividend",it is worthwhile to explore in depth the influence mechanism of labor cost on labor productivity,better respond to the rising trend of labor cost,enhance regional labor productivity,and play the role of labor as the most important supporting factor of the national economy.A problem.The existing research conclusions can be divided into two categories: one is that the rise of labor cost promotes labor productivity,the other is that under certain conditions,there is a synchronous development trend between labor cost and labor productivity.However,few studies have explored the non-linear relationship between labor cost and labor productivity.Few studies have explored the relationship between labor cost and labor productivity based on the background of "talent dividend",ignoring the indirect effect of human capital on labor productivity.Therefore,this paper firstly constructs the wage-investment-productivity model and wage-human capital-productivity model in theory to analyze the effect of labor cost on labor productivity.The two mechanisms show that labor cost has a positive effect on labor productivity,and the effect is non-linear.Then,in the empirical analysis part,the panel data of labor cost,labor productivity and other related factors in 30 provinces in China during the 15 years from 2003 to 2017 are selected.On the one hand,a fixed effect model is constructed to explore whether there is a linear relationship between labor cost and labor productivity,and to explore the difference between the two in different regions.First,labor cost has a positive impact on labor productivity.The increase of labor cost growth rate will promote the improvement of labor productivity.Its mechanism is wage-investment-production efficiency and wage-human capital-production efficiency.Secondly,there are obvious regional differences in the effect of labor cost on labor productivity in the east,central and Western regions.The influence coefficient of labor cost is significantly positive,but the coefficient value is the smallest in the western region,the middle in the eastern region and the largest in the central region.Thirdly,there are differences between the effect of grouped labor costs on labor productivity and the level of labor productivity,which indicates that there may be a non-linear relationship between labor costs and labor productivity.On the other hand,it explores the non-linear impact of labor cost on labor productivity.Considering the important influence of human capital on labor cost,the empirical results with labor cost and human capital as threshold variables show that labor cost has a non-linear positive impact on labor productivity in the national,central and Western samples,showing a U-shaped,inverted U-shaped and N-shaped trend respectively.That is to say,in the context of human capital,labor cost plays a non-linear positive role in promoting labor productivity.The rise of labor cost can promote the improvement of labor productivity,and this role has spatial heterogeneity.Based on the above research,this paper puts forward three suggestions for resolving the law of diminishing marginal efficiency of labor cost and better coping with the rising trend of labor cost:first,improving the income distribution mechanism and speeding up the reform of salary system;second,encouraging the formulation of innovation promotion policies to enhance the innovation ability of enterprises;third,changing development concepts,increasing investment in human capital and improving the overall quality of workers.