Review of hidden carbon emissions, trade, and labor income share in China, 2001-2011

Coordinated development between the economy and the environment is currently one of the most important issues in China. By establishing models concerning labor income share and hidden carbon emissions, and taking trade as the link in their relationship, this study puts forward the scale effects, technological effects, and structural effects that relate to labor income share under the function of trade. We then establish multi-index and multi-indicator constitutive (MIMIC) equation to measure the ratio of hidden carbon emissions to total emissions, which is further considered the basis of the measurement model. Results of regression analysis carried out on labor income share show that hidden carbon emissions do have a positive effect on labor income share. In the meantime, we also prove that under scale effects, technological effects, and the structural effects of trade, hidden carbon emissions affect labor income shares in different directions. Our conclusions and policy implications are obtained from the calculated results.