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Drop in GDP in our country rural labor department of labor income share conversion transfer and identity perspective

Author: YangZuo
Tutor: ZuoXueJin
School: Shanghai Academy of Social Sciences
Course: Population, resources and environmental economics
Keywords: Labor income share transfer of rural labor force household registrationmanagement system institutional environment
CLC: F222.33
Type: PhD thesis
Year: 2013
Downloads: 56
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China’s economy has been developed rapidly and its influence has been improved significantly during more than30years since the reform and opening up, and China has become the second largest economy after the US on the economic aggregate in the world. At the same time, there were several significant changes in the share of labor income over the national income in China, especially since the1990s, the labor income share had been declining year by year, reaching to the lowest point of39.7%in2007. The indicator had rebounded slightly since2008, but not more than45%. Compared with the other countries in the world, the labor income share in China is at a lower level; on the contrary, the proportion of return on capital to GDP is gradually rising; this phenomenon indicated that the initial distribution of China’s national income was currently showing the feature of "strong capital but weak labor", which was inconsistent with the factor endowment structure in China. Given that the initial distribution pattern plays a decisive role in the fairness of income distribution of the whole society, and the sharing of fruits of economic development is the common goal of the state, society and individuals, so it has theoretical and practical significance to the study of labor income share.Most of the existing studies of labor income shares had been carried out from the aspect of fund flow, attaching more attention to the regularity of economic operation but less attention to the influence of institutional environment. Even there was any studies involving the institutional factors, most of the content was about the finance and taxation policies and the reform of ownership, and the influence of social management system, especially the household registration system and the social security system, had been neglected. This paper holds that the reform path of "the rule of policy" shows that social policies are of great importance in China and have great constraints on people’s behavior. The existing studies had found that the unfair distribution of labor and capital income showed the widening income gap between urban and rural areas and among the people at the micro level, but it might ignore that the solidified systems caused the widening income gap among the micro individuals, which in turn affected the labor income share at the macro level. This paper makes an attempt to cut to the chase from the point of institutional environment, mainly answering the question:under the condition that household registration management system still exists, what role has the transfer of rural labor force played in the labor income share? Then, we divided this question into three small questions:First, regardless of the constraints of household registration system, what is the impact of the transfer of rural labor force on the labor income share? Second, what is the impact of household registration system on the income of the transferred rural labor force, and what role does household registration system play in the income gap between urban and rural labor force? Third, when taking into account the other influencing factors, what is the impact of the transferred rural labor force on the labor income share?For the first small question, this paper theoretically breaks down the impact of the transfer of rural labor force on the labor income share into four parts:1) The industrial structure has been changed due to the transfer of labor force, the laborer share of sectors with high labor income share declining while that of sectors with low labor income share increasing, and this effect is manifested driving down the total labor income share;2) The transfer of labor force to non-agricultural sectors changes the supply and demand of labor force in non-agricultural sectors, so as to cause the falling of income level of non-agricultural sectors, which is also manifested driving down the total labor income share;3) The transfer of labor force from agricultural sectors brings an increase in the income level of agricultural sectors, which shows the slowdown of the decline in total labor income share; and4) There exists the linkage effect of wage level between agricultural and non-agricultural sectors, so the impact of transfer of rural labor force on the income of non-agricultural sectors will be partially offset, which also shows the slowdown of the decline in total labor income share. In general, there are two directions of impact of the transfer of rural labor force on the total labor income share, but the overall impact is negative. After the completion of the breakdown of theory, we designed two empirical models, and the results showed that the transfer scale of rural labor force played a significant role in both the labor income share of non-agricultural sector and the total labor income share.For the second small question, we applied the CHNS data from1997to2006, built an equation of labor wage determination with Mincer Function and broke down the determinant in the wage gap between urban and transferred rural labor force with Brown Decomposition Approach. The results showed that household register and identity had obvious impact on the wage income of labor force and also had obvious significance on whether the labor force would join the public sectors or realize the formal employment. However, more than half of the wage gap between urban labor force and transferred rural labor force stemmed from the household registration discrimination and other institutional factors.For the third small question, we first demonstrated theoretically that only the income lower than normal level could be got due to the lag of identity conversion of transferred labor force, and along with the employment proportion of transferred labor force in non-agricultural sectors increasing, the total labor income would be lower and lower than the normal level. We built a regression model including many factors, such as economic development level, development of non-public sectors, transfer of rural labor force, economic globalization, capital deepening and technological progress, etc., in order to test the influence of rural labor force. The results showed that there was quite significant negative impact of transferred rural labor force on the total labor income share, and some of the influences of other factors were consistent with the existing mainstream view, while some were not consistent. Based on the above study, we concluded that the gradual decline of labor income was a worldwide phenomenon and from this perspective, it was an inevitable result of economic development, but more attention should be given to the fairness in the inevitable trend; and due to the influence of household registration management system, the income of transferred rural labor force was lower than the normal market level in China, which was much lower than their contribution to economy.Therefore, the transferred rural labor force plays a negative role in the labor income share; and because of the existence of the special populations, the influences of other factors in the existing studies may be exaggerated.In view of this, we can make a difference in deepening the reform of household registration and supporting system, cultivating labor union, implementing the system of collective bargaining, strengthening the operational regulations of various economic sectors, reinforcing the skills training of labor force (especially the transferred rural labor force), changing trade patterns and attaching importance to the development of agricultural sectors, etc.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic Statistics > Specialized economic statistics > Gross Domestic
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