The Effect of Labor Reallocation and Economic Growth in China

In recent years, China’s economic growth rate has slowed down significantly, exceeding the normal range of cyclical fluctuations in terms declining and period. However, research on structural problems slowdown from sector level is still limited. This paper uses a novel index decomposition method to decompose covariant effect according influence factors. It separates labor input (LIE), reallocation (LRE), productivity (LPE) 1989 2019. The evolving characteristics these effects are revealed. also focuses caused by LRE. study found that: (i) contribution LIE declined during period had recently shown negative value; (ii) LRE peaked 2014 then rapidly declined; (iii) LPE always been an essential contributor growth, with annual 80%. key factors behind downward decline new force input, weakening LRE, technological progress some sectors that have declined. analysis 37% could be explained it. reason lies how transfers: agriculture non-modern services without manufacturing; high-productivity (usually manufacturing) low-productivity services). order reduce pressure future development intervention measures should focus improving employment absorption capacity manufacturing, enabling enterprise innovation, correcting distorted industrial policies, prudently treating environmental protection policies upgrading policies.