The Dynamic Effects of Labor Transfer On Labor Share and The Rate of Consumption in GDP
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| Title | The Dynamic Effects of Labor Transfer On Labor Share and The Rate of Consumption in GDP
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| Author | Chang Jinxiong and Dong Fei |
| Organization | Shanghai University of Finance and Economics |
| Email | changjinxiong@hotmail.com; chang508@mail.shufe.edu.cn |
| Key Words | labor transfer,labor share,consumption rate,Ramsey model |
| Abstract | Through extending the Ramsey model to the dual economy,we study the dynamic effects of labor transfer on labor share,the rate of consumption in GDP and the economic growth.The main conclusions are: First,labor transfer from agricultural sector to urban led to the decline of the labor share.When the labor transfer is almost complete,the labor share will increase.Second and different from other literature,we find that labor transfer is the fundamental cause of low consumption rate,while the decline in labor share is only the surface of the reason.Because it needs much investment to ensure the large scale of labor transfer,increased investment will inevitably reduce consumption rate.Therefore,the decline of the consumption rate is an inevitable phenomenon of larbor transfer,it will be improved when the laber transfer is almost complete. |
| Serial Number | WP753 |
| Time | 2014-11-14 |
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