Measurement of labor reallocation effect in China

Shangfeng Zhang, Congcong Chen and Jose Fernando Gallego Nicholls

Technological Forecasting and Social Change, 2023, vol. 197, issue C

Abstract: Improving the labor reallocation effect can promote the transformation of the driving force of economic growth and enable high-quality development. Therefore, this study constructs a growth source model from the perspective of human capital, considering labor price distortion and time-varying factor elasticity to measure the effect of labor reallocation under the crossover of provincial industries and analyze the impact of labor reallocation on employment share. The relevant findings are threefold. Aoki (2012)) The distortion of labor price is the largest in the primary industry, followed by the tertiary and secondary industries. Bai and Liu (2018)) Measuring the labor reallocation effect from the perspective of human capital allocation reveals a 3.7 % overall loss of the effect under allocation distortion compared with that under effective allocation. Bakas et al. (2017)) In terms of industrial structure adjustment, compared with the labor share under effective allocation, that of the primary industry still requires a 0.25 reduction, and that of the secondary and tertiary industries should be reduced by 0.07 and 0.18, respectively. The research results provide valuable insights for Chinese policymakers to further improve the market economy system and adjust the industrial structure to optimize resource allocation and advance economic growth.

Keywords: Labor reallocation; Factor misallocation; Price distortion; Time-varying elastic production function (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:197:y:2023:i:c:s0040162523006108

DOI: 10.1016/j.techfore.2023.122925

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