The Impact Of Global Value Chain On Labor Income Share Of China’s Manufacturing Industry

With the development of trade in tasks,global value chain become the typical embodiment of economic globalization.Although,in 2020,due to the impact of the epidemic,trade between countries will be impacted,and the process of globalization will slow down.However,as the epidemic subsides and international production capacity recovers,globalization is still the mainstream trend.Countries in the world participate in production in different parts of the value chain according to their comparative advantages.Developed countries dominate the global value chain in the high-end link,while China mainly embeds labor-intensive links at the low-end.There is no doubt that China has made great improvements in economy during the participating process of global value chain.the GDP is rising,and the total import and export trade is increasing year by year.As economic growing,the distribution pattern of factor income is also an important issue which worths of attention.In particular,the share of labor income,which stands for the proportion of workers’ income in income distribution that reflects whether the economic development of a country benefits the masses.According to the SS theorem,the wages of the abundant factors in China will rise,that is,the share of labor income should be increased.However,this is not the case.China’s share of labor income has shown a downward trend since 1995.According to the calculation of the wiod database,the average labor income share of developed countries is about 55%-60%,and that of developing countries is about 45%-55%.However,China’s labor income share is less than 45% all the year round.Too low share of labor income will reduce the consumption level of residents,further restrict domestic demand,and is not conducive to economic development.At the same time,it will expand the income gap between capital and labor factors,which is not conducive to the maximization of social welfare and social equity.In this context,it is of practical significance to investigate the impact of global value chain on China’s labor income share.Therefore,based on the wiod database,this paper calculates the global value chain status index and participation rate of China’s 18 manufacturing industries based on the method of KWW(2010),and empirically analyzes the impact of global value chain on labor income share by using the panel data of China’s manufacturing industry from2000 to 2014.After research,this paper draws three main conclusions: first,the promotion of the participation rate of global value chain is not conducive to increasing the share of labor income,and the influence channel comes from three aspects: price effect,marginal output of labor and intensified competition.Second,the improvement of global value chain status index is conducive to the increase of labor income share,and the influence channel comes from factor demand effect and value creation effect.Thirdly,the GVC status index can regulate the relationship between the participation rate and the labor income share,that is,the rise of the GVC status index is conducive to alleviate the problem of labor income share decline caused by excessive participation in the value chain.