Abstract：Since 1978 , labor income share in China has declined rapidly with drastic economic growth rate . This paper decomposes the labor income sharein theindustrial sector and finds that the movement of the industrial structure is part of the reason for the declining labor income share .We alsoanalyze theeffects of trade ,technology progress and state-owned monopolypower by using the production cost model . It indicates that technology upgrading and decrease of monopoly power will impose a decrease on labor income share .Ceteris paribus ,the coefficient of import penetration rate in the trade variables is positive and significant . Regression in different stages shows that the change of trade mode is the main reason for the declining labor income share .In the time of import-export related processing trade in the Pearl River Delta , import penetration rates promote labor demand and thus raise the labor income share .While in the time of import-oriented processing trade in the Yangtze River Delta , the simultaneous decline of 5 import penetration rate and labor income share is the result of lowering raw material and labor cost from profit maximizing enterprises . Therefore ,import penetration has different mechanisms on labor income share in different stages .
