Abstract:

Research is based on Marx's theory about the two-fold character of the process of production and Bowles' labor contract model introducing supervision cost, and makes equilibrium analyses and numerical simulations through a tripartite evolutionary game to find out how governance by objectives of local governments influences the equilibrium of the labor market and the strategy choices of employees and employers in the process of production. The results show that when supervision cost is relatively low, if local governments put more weight on the welfare of employees in the objectives of economic and social governance, they are able to meet the reasonable interests of employees through labor dispute arbitration and its guidance for trade union work, making sure that employees get paid accordingly for a relatively higher level of efforts in the process of production, in order to encourage employees to work actively, initiatively, and creatively. When most employees invest a high level of efforts, the incentive strategy will be the dominant strategy of employers instead of the supervision strategy. Socialist harmonious labor relations consist of support for the reasonable interests of employees from governments, high levels of efforts invested by employees, and the incentive strategy adopted by employers. Based on these findings, we suggest that the weight on the welfare of employees in the objectives of economic and social governance of local governments ought to be increased to construct socialist harmonious labor relations and achieve high–quality development.

Key words:

local government, governance by objectives, labor dispute arbitration, socialist harmonious labor relations

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