Business environment optimization and labor income share of enterprises: Evidence from China

Jinming Lai, Jinjun Ke, Shuping Lin, Pengdong Zhang and Qihao Zhang

Research in International Business and Finance, 2024, vol. 71, issue C

Abstract: The external business environment in which enterprises operate is often subject to constant change. This paper explores how the business environment affects firms’ labor income share. Utilizing a micro-level dataset of China’s A-share listed companies from 2010 to 2020, we find that an optimal business environment enhances the labor income share. Mechanism tests reveal that a better business environment contributes to the increase in labor income share by fostering human capital upgrading and improving labor dispute resolution. Further analysis demonstrates that the positive effect is more pronounced for firms with lower labor intensity and non-state ownership, and also for firms with coastal locations and higher institutional investor shareholdings. These findings contribute to existing literature on factors influencing labor income share and also provide valuable policy implications for promoting the development of a better business environment.

Keywords: Business environment; Labor income share; Upgrading of human capital; Improvement of labor dispute resolution (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:71:y:2024:i:c:s0275531924002848

DOI: 10.1016/j.ribaf.2024.102491

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