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The Influence of Capital Deepening on Regional Economic Development Gap: The Intermediary Effect of the Labor Income Share

Author

Listed:
  • Dan Wang

    (School of Economics and Business Administration, Heilongjiang University, Harbin 150080, China)

  • Zhen Qiao

    (School of Economics and Business Administration, Heilongjiang University, Harbin 150080, China)

Abstract

At the same time as economic development, the imbalance problem in regional economic development is prominent, which hinders sustainable economic development, especially in China. Explaining the causes of unbalanced regional economic development is an important scientific problem in current economic research. Here, this study takes China as the empirical research area and uses China’s inter-provincial panel data to deeply analyze the impact of capital deepening on the regional economic development gap. As indicated by this study, after a series of potential factors (e.g., industrial proportion, foreign direct investment, and per capita GDP) of the regional development gap are controlled, the capital deepening measured using perpetual inventory can have a strong explanatory power for the regional development gap, i.e., the greater the value of capital deepening, the more significant the regional development gap will be. According to the above conclusion, the effect arising from capital deepening on the regional development gap is still significant, even after the Soviet Aid Project is employed as the current instrumental variable of capital deepening, as well as after the data from the world sample are estimated The study further finds that capital deepening does not directly affect the regional development gap but indirectly affects the regional development gap by affecting the labor income share. Therefore, a higher labor share can narrow the regional development gap.

Suggested Citation

  • Dan Wang & Zhen Qiao, 2022. "The Influence of Capital Deepening on Regional Economic Development Gap: The Intermediary Effect of the Labor Income Share," Sustainability, MDPI, vol. 14(24), pages 1-16, December.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:24:p:16853-:d:1004565
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    References listed on IDEAS

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    Cited by:

    1. Kedong Yin & Yaoao Li & Chong Huang, 2025. "Spatiotemporal characteristics, regional disparities, and distributional dynamics of China’s economic growth in coastal areas: evidence from the DMSP-OLS-like data of 114 cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 74(4), pages 1-31, December.
    2. Bingnan Guo & Peiji Hu, 2024. "Investigating the relationship between energy‐consuming rights trading and urban innovation quality," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(4), pages 3248-3270, August.
    3. Zheng, Yinglong & Shi, Yali & Chen, Kun & Tu, Yongqian, 2025. "Empirical analysis of income gap, financial deepening, and crime rate," Finance Research Letters, Elsevier, vol. 80(C).
    4. Dan Wang, 2023. "Has Electronic Commerce Growth Narrowed the Urban–Rural Income Gap? The Intermediary Effect of the Technological Innovation," Sustainability, MDPI, vol. 15(8), pages 1-16, April.
    5. Cao, Jiawei & Tang, Jie, 2024. "Party organization embedding and enterprise labor income share," International Review of Economics & Finance, Elsevier, vol. 96(PB).

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