Entry deregulation and labor share: Evidence from China

Abstract

Based on the Negative List Policy (NLP) implemented in China, this paper uses Chinese A-share listed companies from 2007 to 2021 as sample and employs the staggered difference-in-differences (DID) method to examine the impact of entry deregulation on labor share. We find that after the implementation of NLP, enterprises in the treatment group experience a 4.4 % increase in labor share. Specifically, in the goods market, NLP will increase labor share by weakening market power and reducing monopoly profits. In the factor market, NLP will boost labor share by impeding capital deepening and increasing labor inputs.