Income Distribution Within The Enterprise: An Explanation Of Property Right

Property rights are the core concept of New Institutional Economics; income is an important factor to ensure economic long-term development. How to explain the income gap within enterprise by using property rights has important theoretical and practical significance. But it still has many problems to resolve now. From a enterprise perspective, since the definition of property right proposed by Coase(1937), it was emphasized by many scholars. But they didn't put the property rights and income gap within enterprise together. In other words, they didn't research on the connection between them. Although Williamson(1979) ever used the property rights to elaborate the nature of firm, Grossman-Hart-Moore (1983) model also explained the "power structure" within firm using the concept of residual control rights, all of them did not expose the fair income distribution based on property rights owners-human capital factor and non-human capital factor, even they did not build reasonable income distribution structure. From income prospective, Emilie Daudey(2005) revealed the positive relations between the level of income inequality and the income share of the labor force, Qiren Zhou(1996) and Lunquan Li(2005) analyzed the influence of the enterprise property rights on income gap, but all of them ignored the nature of individual income gap is delimitation and enforcement of property rights. Thus, current documents can't form a system to research the relationship between factor's property rights and income gap, also can't accurately analyze the income structure and the development of income gap between human capital and non-human capital. Besides, although some current documents consider specialization of the human capital property rights, they never put the human capital property rights and non-human capital property rights in same analysis framework. And they didn't build a fair reasonable income distribution model. How to reduce the income gap still is worth researching. Overall, this thesis compensates the research blank by doing research on nature reason of income gap and establishing a fair income-pricing model.The thesis first explains the nature reason of income gap between human capital and non-human capital using heterogeneity of property rights. Upon the property rights enforced (contract signing and enforcement), reasonable income share for human capital is squeezed by non-human capital. Secondly, based on producing-asset pricing model proposed by Merz and Yashiv(2007), this thesis establishes a fair income-pricing model. At the end, it divides the income gap into two parts, and then gives some suggestion for narrowing the income gap. The main conclusions are as follows:First, nature reason of income gap between human capital and non-human capital is caused by different using right. The carrier of human capital factor is person himself. To increase the efficiency of property rights transfer of human capital factor, the non-human capital factor becomes the supervisor. After that, the non-human capital squeezes the reasonable income share of human capital by various institutional arrangements. Therefore, the income gap is getting much larger.Second, the trading contract of human capital property rights is incomplete. Human capital property rights trading contract can not specify the owners' rights and obligation. In advance, it also can't accurately measure the human capital's input, output and wealth increment. Thus, institutional compensation, asset-specific compensation and proper pay system must be used to decrease the incompleteness. However, it can't change the nature of incomplete contract.Third, fair income pricing model based on the factors'market value. Enterprise residual which produced by human capital and non-human capital together should be shared on equal income right by each of them. It's the key to acquire reasonable income share.Forth, I divide the income gap within enterprise between human capital and non-capital into two parts:normal gap and abnormal gap. Both of them are the cause of income gap, normal gap is the reasonable gap under fair income distribution, and the abnormal gap is the result of unreasonable institutional structure. To narrow normal gap, we can replace one transaction cost which is producing on supervising human capital using right transfer by another transaction cost which is search-math cost to reduce enterprise total transaction costs and increase the income of human capital. And using market value pricing model can reduce abnormal income gap, unify human capital and non-human capital value basis and avoid the abnormal income produced.