Biased technical progress leads to decline in labor share of income.
The article analyzes why the share of income going to workers compared to capital owners has been decreasing in China from 1990 to 2009. The researchers found that the reason for this decline is due to biased technical progress that favors workers over capital. This bias is shown by the rapid increase in worker efficiency and the continuous decrease in capital efficiency. The main factors contributing to this trend are the inability of companies to upgrade their production processes, high bank interest rates causing income transfers, rising rent costs, and increased taxation squeezing business profits.