Language, as a prominent cultural characteristic of a region, has a lasting and extensive impact on economic performance. In this paper, we study the impact of dialect diversity on the labor income share in China. We find that regional dialect diversity depresses the labor income share in manufacturing firms in China. This effect holds up to robustness and endogeneity checks. We explore the transmission channels underlying this negative relationship and find that dialect diversity depresses the labor income share by decreasing worker bargaining power, and this channel can be further explained by the depressing effect of dialect diversity on the participation of firms in export trade and regional human capital accumulation. Heterogeneity analysis shows that the negative effect of dialect diversity on the labor share is weak or insignificant in sectors with strong worker bargaining power such as state-owned enterprises, labor-intensive enterprises, and high-skill-intensive enterprises.

China has maintained great economic growth in the past and reached the status of a middle-income country. Meanwhile, the relationships among environmental pollution, environmental regulation, and economic growth have attracted wide attention. In addition, some studies have shown that economic growth is not balanced in the division of income between labor and capital, and this has become one of the most important issues in China. The conflict over the environment and income distribution is supposed to cause social welfare loss; therefore, we want to examine the impact of environmental pollution and environmental governance on labor income share. Our empirical results show that the relationship between environmental pollution and share of labor income is positive at the present stage. However, the relationship is not linear but rather an inverted-U shape in the long run. In addition, we tested the effects of environmental regulation on labor income share and found an inverted-U-shaped relationship. Although growing concern about environmental pollution adds to the pressure on the government, our statistical results suggest that there is no perfect way to resolve environmental problems. Additionally, labor unions are expected to play a different role in income distribution.