Research On The Impact Of Primary Income Distribution On Civilian Consumption

The low civilian income from primary distribution and large income gap between all social levels are responsible for the deflated consumption in our country. As the income is the prequisition of the consumption and the income distribution structure will influence the overall consumption demand directly due to the decrease of the marginal propensity to consumption. Meanwhile, the effect on the consumption from the income package distribution has widely discussed in the academic field, but the study on the primary income distribution is actually few. The author believes that the way of primary income distribution will to a great extent influence the income of residents and their consumption. The fundamental solution is to reform the primary income distribution system in order to enlarge the civilian consumption.A lot of related theories, including the Marx's labor theory of value, western economists'consumption function hypothesis, have analyzed the logical connection between the primary income distribution and civilian consumption. The effect on the consumption from primary income distribution was manifested in the following two levels: (1)Once the average wage per capita increases 1 percent, the average civilian consumption per capita increases 0.77 percent; (2)The marginal propensity to consumption of high, median and low income classes is 0.6798,0.7783 and 0.9246 respectively. Based on the above positive conclusion, we should reform the minimum wage system, establish and improve the wage growth and payment system to deal with the overall imbalance of primary income distribution. As for the structural imbalance,we should change the traditional firm property rights institution into the joint property rights institution to enhance the share of human capital in the primary income distribution.