The Initial Distribution Of Income, Technological Progress And Economic Growth Potential

The initial distribution of income can be divided into two levels that are the macro-initial income distribution and the initial distribution of income within the main three subjects, this article selects "labor income share" from the "macro-initial income distribution", selects " working within the initial distribution of income " from "the initial distribution of income within the three main subjects", which are used to analyse technical progress and economic growth potential both from both theoretical and empirical aspects.On macro level, labor income share has a dual effect on technological progress: on the one hand, the reducing of labor income share leads to a lower level of consumption to the detriment of innovation, on the other hand, the advancing of capital income share leads to a higher level of business capital available which are conducive to innovation. The broaden income gap within workers will reduce consumption which isn't conducive to innovation, but it will increase the accumulation of household savings that increases the basis of innovation. Labor income share, the income gap within the overall labor and technological progress presents an inverted U shaped relationship. Finally, technological progress is the fundamental driving force for sustainable growth to any economy.On micro level, to the representative enterprises, workers and physical capital co-distribution, not a single-distribution model on the remaining elements, can be used to maximize the endogenous capacity of enterprises. Moderate levels of income inequality within the enterprise can save monitoring costs and the cost of new entrants making a false report, if the level of the income gap is too large, it will produce a lot of costs, including influence costs, administrative costs and loss of co-operation incentives. In representative enterprises, labor income share, labor income gap and enterprise endogenous capacity also presents an inverted U shaped relationship. To the representative enterprises, the businesses which can be rapidly growing usually have a strong technical skills and management capabilities.On empirical analysis aspects, this article selects TFP growth, TFP contribution to the GDP growth rate (the "contribution rate") are respectively used as the substitutive rate of technological progress, economic growth potential of the alternative. According to China's 20 provinces panel data which has a span of five periods, the article find that the initial distribution of income has a notably contribution to TFP growth. Labor income share's influences on the TFP growth rate and the "contribution rate" significant presents a inverted U-relationship, the "optimal" labor income share which is mostly conducive to technological progress and sustained economic growth of the is 53%; Gini-coefficient has a significant negative impact on both.