Abstract :Based on the theory of Hicks factor2biased technical progress , this paper deduces a formula to decompose labor share’s change. It is found that the change depends mainly on three factors : multiplier effect , capital deepening and the progress of labor-(or capital-) saving technology. With these findings , we use dynamic least squares (DLS) to estimate the elasticity of labor marginal output in China’s labor-intensive and capital2intensive sectors , and then decompose their labor share’s change during 1990 ―2006. The result shows that capital deepening will increase labor share , while multiplier effect whose value is between zero and one will contract this positive drive. And the key cause of a declining labor share in both sectors is labor2saving technical progress. In order to stabilize the labor share , we should understand that there is a limit to the long2term influence of capital deepening and pay more attention to the capital2saving technical progress and the development of labor-intensive industries.
Key Words : Labor Share ; Per Capita Wage ; Productivity ; Labor-saving Technical Progress