Abstract: In the context of gradual deepening of the progressive reform and the gradual disappearing of the demographic dividend, how to rationally adjust the government intervention means to improve the labor productivity is an important task to alleviate the current economic downside pressure in China. Through combing the various means of government intervention, this paper analyzes the changes in labor productivity and its various dimensions caused by these means and probes into the direct influences and potential functions of government intervention on labor productivity. The findings show that with the help of the monopoly on land, state-owned enterprises and the financial system the government can interfere the demand of the whole society for investments with different means; and by accelerating the process of capital deepening, a short or long-term effect is caused on labor productivity. A further analysis shows that the behavior of government’s direct intervention in market competition has brought a short-term explosive growth at the expense of the long-term growth potential of labor productivity; there is an inverted U type relationship government direct investment and labor productivity, and the externality of infrastructure determines the positive effect of government direct investment on the technological progress dimension of labor productivity.

Key words: labor productivity; government intervention; capital deepening; pure productivity effect