FACTOR MISALLOCATION, INDUSTRIAL STRUCTURE AND LABOR INCOME SHARE IN CHINA

2020 ◽  
pp. 1-24
Author(s):  
MINGHUI XIN ◽  
MIN GONG ◽  
PAN XIE
Keyword(s):  
Industrial Structure ◽  
Labor Income ◽  
Weak Effect ◽  
Income Share ◽  
Factor Substitution ◽  
The Cross ◽  
Substitution Elasticity

By presenting a two-sector DGE model, this paper investigates the relative misallocation coefficients for capital and labor within three industries in China from 1993 to 2018, then discusses the effect of factor misallocation and factor substitution elasticity on the labor income share. The following three conclusions were reached. (1) The overall labor income share reduced due to the industrialization before 2007, but after 2007 it increased by promoting the proportion of services. (2) Compared with the situation without barriers, the cross-industry factor misallocation reduced the proportion of labor in manufacturing by 44% during industrialization and in services by 5.05% during de-industrialization, respectively. (3) Eliminating the factor misallocation could raise the labor income share by 4.6% in industrialization, but it shows a weak effect during de-industrialization.

scholarly journals Capital Labor Substitution, Structural Change, and the Labor Income Share

2014 ◽  
Author(s):  
Francisco Alvarez-Cuadrado ◽  
Ngo Van Long ◽  
Markus Poschke
Keyword(s):  
Structural Change ◽  
Labor Income ◽  
Income Share

scholarly journals Working for Less: Income Inequality and the Diminishing Share of Labor in China’s National Wealth

2017 ◽  
Vol 13 (6) ◽  
pp. 81
Author(s):  
Songtao Wang ◽  
Tristan Kenderdine ◽  
Zhen Qi
Keyword(s):  
Income Inequality ◽  
Gini Coefficient ◽  
Labor Income ◽  
Income Share ◽  
Income Gap ◽  
National Wealth ◽  
Labor's Share

This paper demystifies variation in labor’s share of national labor income in China from the perspective of the income gap. We extend the gross national labor income function by introducing a Gini coefficient to support our argument that the share of gross national labor income decreases with an increasing Gini coefficient. The hypotheses are tested using provincial data from 1996 to 2010: (1) the Gini coefficient’s ‘inverted U’ shape partially contributes to the U-shaped evolution of the labor income-share; (2) China’s 15 per cent decline in the labor income share can be explained by the widening income gap during that time. 

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