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The Perception of Policy Uncertainty and the Labor Income Share of Firms: Empirical Research Based on Double Machine Learning

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  • Guiming Liao
  • Zheli Hu
  • Zhichen Yang
  • Qianlin Yin
  • Jiahui Chen

Abstract

Based on the double machine learning model, this study examines the impact of perception of policy uncertainty (PPU) on labor income share (LIS). We find that PPU negatively influences LIS. Mechanism test indicates that PPU not only results in a reduction in fixed asset investment, distorting human capital structure, but leads to a financing dilemma for firms, ultimately exerting a detrimental effect on LIS. Additionally, PPU primarily diminishes LIS of ordinary employees rather than executives. Furthermore, the inhibitory effect of PPU on LIS is significantly more pronounced in firms characterized by smaller union scales and those operating within monopolistic industries.

Suggested Citation

  • Guiming Liao & Zheli Hu & Zhichen Yang & Qianlin Yin & Jiahui Chen, 2025. "The Perception of Policy Uncertainty and the Labor Income Share of Firms: Empirical Research Based on Double Machine Learning," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(2), pages 999-1011, March.
    • Handle: RePEc:wly:mgtdec:v:46:y:2025:i:2:p:999-1011
    DOI: 10.1002/mde.4416
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