Market Integration and the Increase of Labor Income Share:Empirical Evidence from Chinese Listed Firms
Increasing the labor income share is essential for economic and social progress in China,contributing to the country's goal of achieving common prosperity.The 20th National Congress of the Communist Party of China emphasized enhancing the distribution system to raise both personal income's share of national income and labor remuneration's share in primary distribution.Meanwhile,as domestic market integration advances,barriers to cross-regional economic activities for enterprises have decreased significantly.In the context of creating a unified national market,understanding changes in firms'labor income share is crucial for fostering common prosperity and shaping a new development pattern.Building on existing theory,this paper first analyzes how market integration influences firms'labor income share and proposes theoretical hypotheses.Using data from A-share listed companies on the Shanghai and Shenzhen Stock Markets(2004-2021),we employ a fixed effect model,instrumental variable regression,and other econometric methods to empirically assess the impact of market integration on labor income share and its mechanisms.Results indicate that market integration significantly promotes the labor income share within enterprises.Mechanism analysis reveals that this effect mainly occurs through enterprise scale expansion,increased market competition,and labor-biased technological progress.The heterogeneity analysis shows a stronger promotion effect of market integration on labor income share for non-state-owned enterprises and those with inter-provincial subsidiaries.Additionally,market integration has a more pronounced effect in tradable and labor-intensive industries,as well as in the eastern and economically advanced regions,compared to non-tradable,capital-intensive industries,and central and western regions.This paper makes three key contributions to the literature.First,while prior research explores determinants of firms'labor income share from various perspectives,few have addressed it from a market integration standpoint.This study expands on the factors affecting labor income share,offering new insights into achieving common prosperity in China.Second,it enhances understanding of market integration's economic consequences by focusing on factor income distribution,thus enriching the theoretical foundation for constructing a unified national market.Finally,this study provides fresh perspectives and foundational insights for optimizing China's income distribution system and supports efforts to build a unified national market.
market integrationincome distributionlabor income shareunified national market
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