Studies On The Income Inequality Of China Rural Inhabitants

Income Distribution is always the important question to the economic studies. A.B.Atkinson once indicate that there is no other questions more interesting than income distribution, and also there is no other economic problem which is short of research like income distribution. Over a long period of time, triditional economics thought that there is some substitutional relationship between equity and efficiency. Pursuing the fair distribution will be at a cost of efficiency. The Kuznets inverse "U" theory seemly hold out this substitutional relationship. The inequality of income distribution exhibit the rising inclination with the rising income level during the earlier phase of economic development and then declined gradually. But lots of empirical research indicated that inequality has negative influence on the economic growth since 1990s. Income inequality increased the chance inequality, supressed the constitution of human capital, and slacking down the development of institution. In different countries, there were different relationship between inequality and economic growth during different periods.Since the reform and openness in 1978, the China economic development has gotten furthermore, scored impressive achievements. The average growth rate of GDP reached 9% from 1978 to 2009 which is much more higher than the global averge. But the structure of income and wealth distribution has changed greatly. The gaps between the rich and the poor is widening continuously. The distribution inequality is more and more serious. Distribution inequality has become very important problem that influence social and political stabilization seriously. Through reviewing the course of reform and openness which was began with rural economy institution reform presented by household contract responsibility system, we find that China rural economy was not only growing fastly, but also with the declining of the gaps of inner income distribution duing the initial period of reform. The reform followed the principal of Pareto improvement and realized the balance between efficiency and equality. Recent year, the reform of income distribution institution didn’t continue the principal of Pareto improvement following the fast growth of rural economy because of the hysteretic institutional reform such as law, taxtation and social security et al. The phenomenon of income inequality in rural areas became more and more serous. The inequality not only exhibit the widen of the rural inhabitant inner income gaps, but also exhibit the rising of regional rural income gaps. The rising inequality influenced the balance development of China economy.This paper studies the inequality influence from the view of growth, consumption and technical progress and explores the co-relationship between income inequality and economic growth, changes of consumer structure and technical progress through analysing the China rural economy. Firstly, we discuss the reasons which caused the rural inhabitant income inequality based on income structure. We find that the main reasons which caused the rise of rural income inequality are salary gap and property income gap in recent phase. The qusi-gini index of salary and property income is always larger than the gini index of total income, and the qusi-gini index of operate income and transfer income are smaller than the gini index of total income. This conclusion indicate that operate income and transfer income have alleviated effcet on total income inequality. But in term of the elasticities of every qusi-gini index, the influence of salary and operate income are weakening gradually, and the influence of the property income and transfer income are raising during the research periods. Even though the influence of the property income and transfer income are still very small, raising transfer income to the poor inhabitant is the important method to decrease China rural income gap. Secondly, this paper made an empirical analysis on the co-relationship between rural economic growth and income inequality. The analysis indicates that the rural income inequality is benificial to the rural economic growth, and then the economic growth in rural areas has negative effect on income inequality. This opposite strengthes relief the increase of rural income inequality. But the study also indicate that the inequality can cause much more inequality. Although the alleviated effcets of economic growth on inequality increase gradually and finally exceed the inertia of inequality itself in the long run, this course is a decades period. If we consider the cumulation effcets, the economic growth isn’t sufficient to decrease income inequality. So the rural economy itself can’t generate trickle-down effect. Anything else, the richer has the tendency that transfer their assets from rural to urban which is detrimental to the investment increase. For the rural economic development, raising the social welfare and changing the investment outflow is the emergency problems. Thirdly, we validate the positive effcet which rural income inequality influenced on consumptions. Traditional Keynes’consumption theory thought that income inequality results in the decrease of the consumption level. This paper uses persistent income hypothesis model to analyse this problem and finds that the income inequality is positive to the level of consumption with the rising of income inequality in rural areas. The ratio of the bisic demand of rural inhabitants to pure income exhibit inverse "U" shape. This indicate that the rural inhabitants’basic living demands has been satisfied. We also find that the richer has higher income elasticity than the poorer. The rural inhabitants is in the transitional period of upgrading of consumption structure. Transfering the consumption concept and promoting the upgrading of consumption structure are the main ideas that stimulate the consumption in rural areas. In terms of regional rural inhabitants consumption inequality, the consumption gini index exhibits invert "U" shape. This shows that the rural inhabitants are very cautious to the consumption exceeding the baisic demand. The income and consumption uncertainty which were generated in the course market economy reform resulted in the increase of precaution saving of rural inhabitants. It prevented the rising of rural consumption level to some extent. Fourthly, Using SFA to analyse the factors which influence the gaps of rural inhabitants income. Through analysing the technology efficiency we know that per capita material capital and per capita human capital are the main reasons which results in the region rural income gaps. Increasing fixed assets investment and promoting education inputs are the main methods to be used to reduce the gap between developed region and developing region. From the respective instance, per capita material capital is the main factor influencing the easten regions, per capita human capital is the main factor influencing the middle regions, and these two reasons are both important factors to income gaps in westen regions. Elsewhere, this paper analyse the positive effcet of technical progress on income distribution inequality using allocation data of production factors in township enterprises.This paper includes seven chapters. The details is showed as below.Chapter one is introduction which expatiates the research necessity of income inequality and illuminates the correlative basic conceptions, research methods, structures and innovations.Chapter two is literature reviews which summarizes the literature in relation to economic development theory. The relationship between income inequality and economic growth, consumption changing and technical progress are also showed and commented.Chapter three describes and analyses the inner income inequality and regional inequality in rural areas. This chapter gets the reasons which results in the rural income inequality. The contents include:1.the trace of total income growth and income gaps changes for rural inhabitant since reform and openness; 2.researches on the reasons which results the total income gaps through studying the income structures; 3.the trend and influence factors of regional income gaps.Chapter four studies the correlationships between income inequality and economic growth. This chapter uses SVAR model to analyse the rural inhabitant inner correlationship between income inequality and economic growth. It also uses dynamic panal data model to analyse the regional correlationship between inequality and economic growth.Chapter five is the research about income inequality and consumption inequality. Firstly, we test the influences which income inequality put on the consumption growth and uses the ELES model to interpret the influences. Secondly, we dicuss the changing path of regional rural inhabitants consumption inequality under different income levels and analyse the income structure influences on consumption structures using mental accounts theory.Chapter six studies the relationship between technical progress and income inequality. The contents include:1.analysing the regional rural technical progress influence on income growth using SFA; 2.reviewing the input contribution in different rural areas; 3.demonstrating the positive effect of technical progress on rural income inequality using township enterprises distribution data.Chapter seven is conclusions. In this part, we sum up the research conclusions and advance the research prospects basing on the research deficiencies.