Research On Industrial Monopoly And Incom Distribution Gap In China

There is an old saying in China, that is "inequality rather than want is the cause of trouble". From ancient time, the equality and fairness have great influence on Chinese nation, and the problem of income distribution is the significant embodiment of equality and fairness or not. Serving as the most sensitive "nerve" in social development, income distributions affects the interests from all aspects and the distribution results in reason or not decide whether or not the political stability and economic construction’s success are. In the past30years, the income distribution system in our country is always in a constant state of flux, and some of those changes are positive and effective during the market oriented reform while some result in interest expansion of parts of department and group, of which the industrial monopoly and income distribution is one example.A variety of data show, there is wide income distribution gap between monopoly industries such as electric, telecommunication, oil, aviation and tobacco industry and non-monopoly industries, which also bring about widespread concern and dissatisfaction. In the problem of industrial monopoly and income distribution, the key point is monopoly industries transfer social welfare to the minority by the protection of government. The absence of owners, insider control, unreasonable distribution system, labor market segmentation, together with higher human resource level force and maintain the monopoly industries wage in a high level.Involved in many interest relationships,the monopoly industry income distribution reform meet heavy resistance, meanwhile insufficiency in theoretical study and inadequate for policy conclusion haven’t added fuel to the flame. Therefore, this paper combine multidisciplinary fields to make a deep analysis on industrial monopoly and income distribution, including not only the wage and income gap beyond wage between monopoly industries and non-monopoly industries but also the income gap between senior managers and staffs within monopoly industries. In a word, this study follows the framework about introducing question, depicting question, analyzing question and last solving question. In our paper, the headlines can be summarized in five fundamental problems as follows:First, the judgment of monopoly industry and the comparison of industrial monopoly and income distribution gap between China and America. The prerequisite of this study is to determinate what are the monopoly industry. In the already existing papers, there is no definite method defining monopoly industry so we combine subjective and objective methods to determine. The subjective method is following the Anti-trust Law and another two standards while the objective one adopts three indicators, which are state owned economic participation, industry concentration and the ratio of industrial average wage and national average wage. Finally, this paper defines12monopoly industries, there are Mining and Washing of Coal, Extraction of Petroleum and Natural Gas, Manufacture of Tobacco, Processing of Petroleum, Coking, Processing of Nucleus Fuel, Production and Supply of Electric Power and Heat Power, Production and Distribution of Gas, Production and Distribution of Water, Air Transport, Bank, Telecom&Other Information Transfer Services, Transport Via Railway, Post respectively.After the determination of monopoly industry, we describe the status quo of industrial monopoly and income distribution from1996to2011by means of Chinese Statistical Yearbook. Since1996, the income gap between monopoly and non-monopoly industry, is widening day by day with the speed of43%. Compared with non-monopoly industry, monopoly industry has an overwhelming advantage both on the amount and growth speed. On the top list of monopoly industries are Air Transport, Bank, Manufacture of Tobacco, Extraction of Petroleum and Natural Gas, while on the last of non-monopoly industries are Manufacture of Textile, Restaurants, and Agriculture, Forestry, Farming of Animals and Fishing. The industrial extreme ratio always maintains6times. In this part, we also compare Chinese industrial monopoly and income distribution with American counterpart. The results manifest the growth speed of Chinese monopoly industry is faster than American counterpart, and the former is about7times of the latter which confirm the income gap of monopoly industry is more evident and severe in China.Second, industrial monopoly and wage income gap. In the last chapter, we know the wide income gap is owing to the high wage in monopoly industry, however which factors form it is the question we should pay attention to. It is blameless that administrative monopoly acts as the system security of high wage in monopoly industry. Relying on monopoly place, monopoly industry could earn high profit margins and the production cost is passed on to consumers easily. The absence of owners, weak regulation and insider control make high wage in monopoly industry naturally, and unreasonable distribution system also yields to high income in monopoly industry. Labor market segmentation shapes the internal stable labor market and maintains the status in quo. Otherwise, there is higher human resource level in monopoly industry. And the possible reason is the high income attracting, which lead the mutual promotion model between high income and high human resource level in monopoly industry.The second question in this part is the study of the influencing factors of industrial wage income gap. Our objects of study are categorical industries in statistical yearbook from2005to2011. The paper analyzes the forming of industrial wage income gap, and specifically, the influencing factors for causing industrial wage income gap are industrial monopoly, level of human capital, investment in fixed assets per capita and industrial scales. On the basis of analysis, we estimate industrial wage income gap’s contribution to the whole income gap by MLD index, and the result is the income gap between and within groups is becoming widening and widening. The wage income gap between groups is with the average contribution of45%from2004to2010although there is a little decrease in2011, which means wage income gap between groups due to industrial monopoly pay an increasing role in exacerbating the whole gap.Third, industrial monopoly and income gap beyond wage. This chapter contains4parts. We depict the status quo of income beyond wage of monopoly industry in our country. Because of data acquisition’difficulty, we just try typical cases to discuss, and all cases manifest that it is amazing for the loss of social welfare made by income beyond wage in monopoly industry. Following, we take advantage of two methods to predict industrial income beyond wage, the one is depending on mending coefficients and the other is depending on the per capita cost management. From the calculation, the wage levels of industries grow obviously. The income gap containing income beyond wage is more critical. There is something different with the influencing factors of industrial income beyond wage. For example, factors such as level of human capital and labor productivity have no impact on industrial income beyond wage, whereas industrial monopoly, profit level, capital intensity and the ratio of foreign capital produce an effect on income beyond wage with the contributions of38%,23%,9.5%and4%respectively. The remaining part is about25%beyond reasonable explanations, and we think the high and low of position and amounts of social relationships may be potential sources. And then we pick up18industries, in Chinese Industry Economy Statistical Yearbook from2005to2011, to investigate the contribution of income beyond wage gap to the whole income gap. The result is to be noticed, the contribution is up to40%above. It is obvious that the income beyond wage gap has become the accelerator of national income distribution gap.Fourth, the interior income distribution gap in monopoly industry. The existing study on industrial monopoly and income gap mostly concentrate on industry between each other, while the further exploration in the interior income gap of monopoly industry can make a better understanding on industrial monopoly and income gap. Because there are many forms of interior income gap, we first define the range of study which is the income gap between senior managers and general staff. The interior income gap is not shaped by one night, which is gradually formed along with the establishment of modern enterprises system. Nowadays, the income gap between senior managers and general staff, especially with front line staff, is very large, which make income distribution unfair seriously. The key point of interior income gap study is also on the influencing factors beyond question, and we put forward4hypotheses in the following. The first hypothesis is, industrial monopoly serves as the fundament of the forming of interior income gap, comparing with non-monopoly industry’s interior income gap, the interior gap in monopoly industry is smaller. Enterprises performance, which is closely related to interior income gap, is the principal standard to measure internal allocation proper or not. The conception of fair distribution is rooted deeply in monopoly industry in our country, and staffs will strive for "fair wage" when meeting good performance. It is obvious that staffs in monopoly industry enjoy high income and make interior income gap small. So we think there is a negative relationship between enterprises performance and interior income gap which is the second presupposition. The phenomenon of insider control is serious in monopoly industry, so the third assumption is the managers’power is larger, the interior income gap is wider. There is a positive relationship with each other. The policy of limiting salary aims to control senior managers’high salary, and it doesn’t realize the expected effect but serving as the promote agent of widening income gap. This is the fourth assumption. Next, we take advantage of the CSMAR data to test these four hypotheses above and all of which have passed empirically.Fifth, the rationality discuss and solutions to industrial monopoly and income distribution gap. Nowadays the most interesting thing among people is the rationality discuss to industrial monopoly and income distribution gap. We depend on industrial income rational index to judge, and the result is the industrial income rational index of monopoly industries is smaller than zero which lies in unreasonable internals. Because of this, the income gap is also unreasonable. In this part, the second question is solutions to industrial monopoly and income distribution gap. The only solution to industrial monopoly is to carry forward market oriented reform and further improve income distribution system in monopoly industry. We should take the implementation gradually, purposefully and comprehensively. At the first, we should break industrial monopoly which serves as the institutional foundation of industrial income gap and the key point of solutions. We can broaden the condition to enter into the market, introduce competition system and carry on multi-subjects participating to market which aim to promote the degree of competition. And the following is to strengthen the regulation on monopoly industry’s distribution system, such as reasonable growth system of income in monopoly industry, managers’reasonable growth and incentives system of income and lower the entry barriers. Also we should take supervision by law, for example, improving anti-trust law and increasing its enforcement, perfecting specialized laws of monopoly industry and draw new industrial statutes. Meanwhile, it is the essence to fix the market and government on a reasonable position for solving the industrial monopoly and income gap. The government must play its role properly and be restricted its power without owning the dominant place. And it should put more power to market and society and develop the fundamental function of market allocation of resources.