Title: Mixed Ownership Reform and Labor Income Share of State-Owned Enterprises

Speaker: Dong Chen

Time: 13:30-15:00, March 17th, 2023 (Friday)

Venue: Tencent Meeting (Meeting ID: 966 598 656)

Organizer: School of Accounting, Dongbei University of Finance and Economics

Abstract:

In this paper, we examine the impact of mixed ownership reform on labor income share of state-owned enterprises using hand-collected and organized data on mixed ownership reform of state-owned listed companies. It is found that the labor income share decreases after the implementation of government-led mixed reform, while enterprise-led mixed reform does not have a significant impact on the labor income share. The mechanism is that, on the one hand, by simultaneously increasing the labor productivity and per capita wage level of enterprises, the growth of labor productivity is greater than the growth of per capita wage; on the other hand, by reducing excess redundant employee rate, government-led mixed reform eventually leads to a decrease in labor income share. Further research indicates that the effect of government-led mixed reform on reducing labor income share is mainly found in high unemployment areas, competitive industries and labor-intensive enterprises. In the end of the paper, we also finds differences in the effects of mixed reform on labor income share under different mixed reform models. Compared to conducting mixed reform by restructuring and establishing new enterprises, conducting mixed reform by employee shareholding and introducing strategic investors in the same industry can result in a decrease in the labor income share of SOEs. The research in this paper provides research insights on how to balance the mixed reform with optimizing the income distribution patterns. The findings suggest that after the mixed reform of SOEs, even though the absolute compensation received by workers and labor productivity of enterprises have both increased, workers may still not fully share in the dividends of the mixed reform of SOEs, resulting in a decrease in the labor income share. Therefore, in the process of deepening SOE reform, attention should be paid to improving the mechanism for determining enterprise wages.

Introduction of Speaker:

Dong Chen is an associate professor at the School of Economics and Management at Wuhan University, P.R. China, with a PhD in management. Chen’s research results have been published in Management World, Finance Research, Accounting Research, Finance and Trade Economics, China Journal of Accounting Studies, China Journal of Accounting Research, Asia Pacific Journal of Accounting & Economics, etc. Chen is in charge of project of the National Natural Science Foundation of China and the Humanities and Social Sciences Project of the Ministry of Education.

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