New Characteristics of Capital-biased Technical Change and Its Influence Mechanism on the Labor Market

Gan Chunhui, Jiang Hong

Journal of Finance and Economics Vol. 48, Issue 05, pp. 34 - 48,79 (2022)  DOI:10.16538/j.cnki.jfe.20220317.302

Summary

With the increasing of artificial intelligence and other automated capital investment, the bias of technical change will show new characteristics. The existing literature neither pays attention to the new characteristics of capital-biased technical change, nor further explores the labor market mechanism influenced by the new capital-biased technical change. Based on the Stochastic Frontier Model in the form of Translog Production Function, this paper measures the bias index of technical change in manufacturing industries by using the data of listed manufacturing enterprises from 2012 to 2019, and empirically studies the influencing mechanism of biased technical change in manufacturing on the labor market. The results show that: (1) The technical change of manufacturing industry in China is biased towards automated capital. (2) The automated capital-biased technical change of manufacturing has a substitution effect on the total employment, and the productivity effect and the output scale effect are two influencing channels. (3) The automated capital-biased technical change of manufacturing improves the level of labor wage through the productivity effect and the skill structure effect. (4) Compared with state-owned manufacturing enterprises, this kind of technical change has a greater negative effect on non-state-owned enterprises; compared with the eastern region, the technical change of manufacturing in the central and western regions has a greater substitution effect on labor demand; compared with high-tech industries, the substitution effect on low-tech industries is greater. At the same time, the automated capital-biased technical change of state-owned, eastern and high-tech manufacturing enterprises significantly improves the average wage of labor, while the impact on non-state-owned, central and western and low-technology manufacturing enterprises is not significant. (5) Based on the industry linkage effect, the automated capital-biased technical change in the upstream (downstream) industry of manufacturing induces the automated capital-biased technical change in the downstream (upstream) industry, and then produces the employment substitution effect and the wage compensation effect on the downstream (upstream) industry. Therefore, to vigorously promote the development of automated capital-biased technical change, upgrading labor skills, amplifying the positive effect of productivity and output scale on the labor market, and paying attention to the conduction and synergistic effect of the industrial chain are important ways to adapt to the machine replacement, achieve stable employment and promote high-quality employment.

Keywords

automated capital-biased technical change; labor market; employment; wage