Optimal Distribution Of National Income

This thesis focuses on estimating the optimal pattern of national income distribution based on economic growth, because income distribution and economic growth are timeless subject of economics, and the adjustment of the pattern of economic benefits represented by the change of national income distributional pattern is the key of China's national economy continued to growth rapidly in 30 years. Economic growth is a very important gauge, and today(?)small difference in growth rate will change into great one at the level of economic activity in the future. But only when economic growth can benefit the majority of people, then it can be transformed into a long-term sustainable development process.After illuminating the reasons for studying on the distribution of national income and defining the objects in this study, the thesis reviews the resesch achievements on income distribution and economic growth theory of classical economics, Marxist economics, neoclassical economics and Keynesian economics. The retrospective and analysis of the income distribution and economic growth theory in the economic history, constitutes the theoretical starte and basis for studying on national income distribution and economic growth. On this basis, this thesis set up a theoretical model of optimal national income distribution based on economic growth. It (?) generally believed that the income of factors and main bodies and the use of national income has positive effects on economic growth which has a optimal value when we study the pattern of national income distribution in terms of economic growth. Exceeding the optimal value, further expand in scale will have a negative effect on economic growth and two facts can account for it. On the one hand, the income of factors and main bodies and the use of national income have a diminishing trend of marginal products, on the other hand, among the production, distribution and use of national income, an increase in one field inevitably procures the decline in anothers. The main ideas the Model is distribution in accordance with performance, namely, the production factor contribute to production determine the revenue share of the factor deserves.To obtain general conclusions from the historical experience of a single country, we must compare it with the historical experiences of other countries in some way. The basic hypothesis which transnational econometric estimate based on is: the emergence of the process of economic development among countries has sufficient consistency. As the increase of per capita income level, national income distribution in the process of production, distribution and use will change the same in line. This thesis collect more than 20,000 observational data including 150 countries and 17 years of 11 variables, analyzing the evolution of the distribution of national income. At the current level of economic development, the optimal patterns of the national income distribution in our country are: Labor, 57.38 percent of national income, capital 42.80 percent; government disposable income 6.92 percent, enterprises disposable income 39.93 percent, residents disposable income 53.26 percent; consumption 71.29 percent, therein, government consumption 18.64 percent, household consumption 52.90 percent. Investment 23.58 percent.Cobb-Douglas production function provides the theoretical basis of the labor and capital income share. And labour and captical are two of the most important factors of production. The residual which can not be interpreted by these two factors in economic growth normally be called total factor productivity, and the greater the residual, the worse the capacity to explain the sources of economic growth. Based on measuring the input of labor and capital, this thesis estimates China's Cobb-Douglas production function. In accordance with the labor and capital contribution to economic growth, from 1952 to 2004, labour income should be 53.57 percent of national income, capital income 46.43 percent. The evaluation of Cobb-Douglas production function of the private industrial enterprises in our country in 2006 indicates that the labor contributed 56.23 percent to the added value, the capital 38.24 percent.Income distribution theory attaches much importance to the main bodies distribution pattern in the ultimate structure of income distribution. The income of economic main bodies not only provides material security to one body in accordance with a certain national economy strategies and plans for resources allocation, but also is the required material means to motivate economic efficiency of this body. Based on the evaluation of income distribution pattern of main bodies, this thesis estimates China's optimal main body income distribution pattern, and it obtain that the optimal share of residents disposable income is 59.50 percent, optimal share of government disposable income 17.72 percent, optimal share of enterprise disposable income 22.78 percent by the value of variable's marginal output elasticity.Consumption demand steady growth is the driving force behind the promotion of sustained economic growth, and changes and upgrade of consumption structure are the source of promoting economic growth. Before 1978, Chinese Government limited harsh consumption in order to maintain a higher investment rate, with consumption rate lower than the Chenery "standard structure" more than 20 percentage points in a long-term. In 2004, Chinese consumption rate lower than the world average by 26 percentage points. However, China's experienced data in 1952-2006 showed that China's current optimal consumption rate is 72.30 percent, the optimal investment rate 28.18 percentThe econometric analysis in this thesis shows mat our country's income distribution deviates considerably from the optimal pattern of of national income distribution which can be demonstrated by the following. At the pattern of initial distribution, national income seriously tilt to the capital, which lead to the workers not receive the deserved rewards; while at redistribution pattern, national income seriously tilt to the government and enterprises, and the share of residents's income decreases gradually; at the use of national income, national income tilt to investment seriously, which reduces the effect that consumption plays on economic growth.In the entire national income distribution pattern, the main body income distribution pattern is the core, and the share of residents disposable income is the key to all of the national income distribution. In this thesis, the variance decomposition result shows that the labor share, unemployment rate, bank deposit interest rates, inflation, government disposable income and social security expenditures fhare in GDP, have different effects on the share of residents income. In order to increase the share of residents income, we need to further promote the marketization process, and equitable economic growth, give full play to the price mechanism at the role of distribution, expand domestic demand to promote employment, meet the requirements of the legitimate interests of workers, adjust the relative share of labor and capital; continue promote financial in-depth process to allow residents to gain more property income; increase social security and transferable payments, and control the share of government disposable income.