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The “Supply-Side Reform Policy” and the Share of Labor Income in Enterprises

Author

Listed:
  • Long Chen

    (School of Economics and Management, Xinjiang University, Urumqi 830002, China)

  • Baolei Qi

    (School of Economics and Management, Xinjiang University, Urumqi 830002, China)

Abstract

This article takes the supply-side structural reform launched in 2016 as a quasi-natural experiment and uses the “DID” method to analyze the relationship between the policy effects of supply-side reform and the labor income share. Firstly, the basic conclusion is that the “supply-side reform policy” can reduce the labor income share of enterprises in the “six major industries”. The correctness of the benchmark regression results was verified through a series of robustness tests. The results of the main regression were validated based on three different heterogeneity analysis perspectives: firm ownership, firm region, and government intervention. Secondly, two mediation mechanisms were examined, and the results showed that increasing operating income can positively enhance the “supply-side structural reform” in reducing the labor share of income in all enterprises, while increasing R&D investment can negatively enhance the effect of the “supply-side structural reform” on the reduction of the labor share of income in all enterprises. The heterogeneity of the two intermediary effects indicates that state-owned enterprises and private enterprises have different performances. The research results of this article indicate that the “supply-side reform policy” can effectively reduce the labor income share of target enterprises, reduce the proportion of excess employees, and enhance the vitality of target enterprises. The policy suggestion is to continue promoting supply-side structural reform, a policy which is in line with the requirements of the high-quality and sustainable development of Chinese enterprises.

Suggested Citation

  • Long Chen & Baolei Qi, 2024. "The “Supply-Side Reform Policy” and the Share of Labor Income in Enterprises," Sustainability, MDPI, vol. 16(12), pages 1-22, June.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:12:p:5231-:d:1418414
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    References listed on IDEAS

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    2. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 879-907.
    3. Nicholas Kaldor, 1961. "Capital Accumulation and Economic Growth," International Economic Association Series, in: D. C. Hague (ed.), The Theory of Capital, chapter 0, pages 177-222, Palgrave Macmillan.
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