A Study On Household Wealth Inequality In China Based On The Relevance Of Income And Wealth

In the process of social development,the income of Chinese households has been continuously improved while the average level of household wealth has been accumulating rapidly.The wealth inequality has undergone profound changes,the issue of wealth inequality has taken more and more attention.China's wealth inequality,which is closely related to the system reform and modern economic development,is also far-reaching influenced by the income distribution of recent decades years.Thus,study on income or wealth inequality alone is not conductive to exploring the essence of inequality.The inequality of wealth is a social problem,which may impair happiness and fairness of resident and lead to opportunity inequality and class solidification.Property taxes and inheritance taxes are common policies to reducing wealth inequality,but the experience of developed countries shows that theirfunction are very limited.Actually,there is a close connection between income and wealth,the accumulating and evolving of wealth inequality is closely effected by this connection.My research is aimed to analyze and quantify the relationship between income and wealth inequality,and try to reduce wealth inequality by adjusting income distribution.The research is organized as four parts:The first part is the analysis and elaboration of the relationship between income and wealth inequality.Based on the relevance between household income and wealth,we derived the relationship between income and wealth inequality and elaborated their acting path according to the actual situation.There are two paths that income inequality affects on wealth inequality,the first one is leading to the difference in household savings and wealth accumulation,the second is leading to the difference in house property ownership and wealth appreciation.On the other hand,the distribution of wealth could affect income distribution system directly,in addition,wealth gap could lead to income gap,including property income and labor income.The second part is the measurement of China's income and wealth inequality.The researchestimates household income and wealth inequality using the data from China Family Panel Survey conducted in the year of 2010-2016,including their degree,structure and urban-rural differences,the connection between income and wealth is also preliminarily measured by the comparison of income and wealth distribution.The degree of wealth inequality in China is higher than income,and household income and wealth distribution have certain differences.The property income takes a smalle but increasing proportion in the composition of income,and the degree of its inequality is extremely high;the proportion of property income in middle income families is lower than others.In the composition of wealth,financial asset are concentrate to higher income families,while house asset which accounts for a large proportion in the total net wealth,also have a tendency to concentrate towards higher income families.The third part is the construction and parameter estimation of relevance model between income and wealth inequality.In this part,we divide the sample families into many groups and express the relevance of income and wealth in each group with a series of simultaneous equations.And the inequality of income and wealth could be calculated by the group average income and wealth.In this way,the household income and wealth and their inequality are bounded together,we can quantify their relationship by appropriate econometric methods.According to the estimated results,household income have positive effect on wealth in middle and high income families,in low income families this effect is statistically insignificant.For most families,it's difficult to obtain property income by owning wealth,the positive effect of wealth to income is only embodied in families with very high level of income and wealth.In addition,the equalization of income and wealth distribution would constrain product efficiency,corresponding to lower average income and wealth level.The last part is the optimized simulation of wealth inequality.Based on the relevance model of inequality between income and wealth,an objective programming model is designed to calculate the optimal income of each group when the object of model is minimizing wealth inequality.According to the simulation,wealth inequality could be reduced by adjusting income distribution.To reach the minimum wealth inequality,the average income of the lowest and the most high income group should be increased and decreased as far as possible respectively,and other groups should be adjusted properly.Compared with the object of minimum income inequality,minimizing wealth inequality requires middle income families at the position of 60%-90% obtaining higher income.Without regard to income distribution policy,the proper development of macro-economic indicators could also reduce wealth inequality.The optimization result requires to make a great effort to develop economy and control the housing prices steadily.At the same time,paying more attention to the protection of the underlying families in the development of education and urbanization,stimulate the wealth growth of bottom families.Expressing and estimating the relevance of income and wealth inequality is very hard since it is multiple compound and complicated.The main contribution of this research is combining the micro household data with macro distribution information,expressing the relevance relationship between income and wealth inequality by a series of equations,based on which,then designning an objective programming model to simulate the improvement of wealth distribution when household income was adjusted.