Abstract: Free trade zone is a "test field" for a new round of reform and opening up against the backdrop of both international and domestic economic circulation. The new development pattern has to be underpinned by higher-level domestic demand and household income. Therefore, finding how to deepen the reform of income distribution is a challenging task for China's high-quality economic development. Based on the free trade zone policy as the natural experiment, this paper adopts the multi-period differential method to test the influence of free trade zone policies on the labor income share of enterprises with the sample of Shanghai and Shenzhen A-share listed companies from 2009 to 2019. The study finds that free trade zone policies significantly improve the labor income share. Further analysis finds that free trade zone policies improve labor income share mainly by improving enterprise competition environment, play a more significant role in promoting the labor income share of non-state-owned enterprises, the service industry and coastal enterprises, and show a certain microeconomic effect. These findings not only provides a new explanation for how the labor income share of micro enterprises is affected, but also provides policy reference for improving the policy construction of free trade zone and deepening the reform of income distribution system.

Key words: free trade zone, the income distribution, labor income share