MA Caoyuan, WANG Meihua：Economic Fluctuation and Labor Income Share——Evidence from China's Provincial Panel Data

Abstract：Based on empirical study and using provincial panel data, this paper reveals the general characteristics of Chinese labor income share during the short-term economic fluctuations.Labor income share has significant “counter-cyclical” nature during the output fluctuations, but presents “U” shaped track with rising price.After controlling the short-term economic fluctuations and taking the dynamics of the model into account, we find that the decrease of Chinese labor income share since 1990s is just a short-term “counter-cyclical” phenomenon rather than a trend along with long-term economic growth.Further study finds that, it results from that “wage stickiness” and some special factors of Chinese labor market make labor payment cannot change with the output growth and price change.

Key words： Labor Income Share    Output Fluctuation    Price Fluctuation    Wage Stickiness

source:Finance & Trade Economics ,No.9,2015