Government-guided funds are composed of financial funds at all levels and social capital. The purpose of their establishment is to form a supplement to the poor private investment caused by insufficient private benefits and large positive spillover effects, instead of competing with private capital for profits.

Based on the labor income share of micro-enterprises, this paper explores the impact effect and transmission path of government-guided funds on the labor income share of invested enterprises from a financial perspective. The results show that: (1) Government-guided funds significantly increase the labor income share of invested enterprises. (2) After clarifying the three mechanisms for the effectiveness of government-guided funds, it is found that when selecting investment targets, the authentication mechanism plays a leading role; resource and governance mechanisms and social capital are used to jointly empower invested enterprises after investment. (3) Improving the human capital allocation structure of invested enterprises and increasing R&D investment are the specific transmission channels for government-guided funds to increase the labor income share of invested enterprises.

This paper has the following marginal contributions: (1) It enriches and expands the literature on the impact of capital markets on labor income share from the perspective of government-guided funds. (2) It extends and deepens the theoretical research on the micro-effect of government-guided funds from the perspective of the distribution of resources and income among different elements within invested enterprises. (3) It distinguishes between pre- and post-investment based on the theoretical basis of different empowerment mechanisms, and explains the differences in cross-sectional characteristics and underlying principles.

The research findings have the following implications: (1) Attention should be paid to the differences in the effects of government-guided funds before and after investing in enterprises. (2) Government departments should fully utilize fiscal funds and leverage the positive role of government-guided funds in helping invested enterprises increase their labor income share. (3) Government-guided funds should focus on leveraging the guidance amplification effect, moderately controlling the investment ratio, and avoiding the crowding out of social capital. (4) We should fully leverage the characteristics of government resources and establish guiding advantages to help build an innovation-oriented modern financial market system.