Study on the Effect of Population Aging and Biased Technical Progress on Labor Income Share

Purpose/Significance Clarifying the factors influencing the decline of labor income share in China is important for improving the factor income distribution pattern and achieving sustainable economic development. Design/Methodology Based on the CES production function, a theoretical model of decomposing labor income share is constructed and an empirical analysis is conducted with a sample of inter-provincial panel data from 2000 to 2019 to explore the intrinsic infulencing mechanisms of population aging as well as biased technical progress on labor income share in China. Conclusions/Findings The increasing degree of population aging leads to the decline of labor income share in China. And the deeper the degree of technical progress is in favor of capital, the lower the labor income share is in social output. Whether from the national or regional level, the aggravation of population aging is an important reason for the decline of labor income share in China, but the influence of biased technical progress on labor income share has significant regional heterogeneity, and the change of capital-labor-output ratio in different periods will also lead to the change of labor income share.