An Analysis On Effect Of Income Distribution On Economic Growth

China is experiencing rapid economic growth; China's income inequality has been widened too. Whether the expansion of the income inequality will impact economic growth,what kind of impact they will result in ,and what is the interaction mechanisms of income inequality and economic growth? This essay tries to analyze the impact that the income inequality on economic growth using theoretical analysis and empirical analysis . The conclusion is that the income inequality has a negative impact on economic growth. And some `policy recommendations are put forward about the corresponding conclusions .This essay reviews the literature which analyse the impact of income inequality on economic growth.Then one interaction mechanism was selected to analyse the impact of income distribution on economic growth of those four interaction mechanism,also the theories which analyse the interaction of income inequality on human capital , as well as economic growth which on the basis of human capital were reviewed.Then this paper analyses the mechanism that the income inequality affect the accumulation of human capital and those affection human capital on economic growth. This essay focuses on empirical analysis, human capital and physical capital accounting method are used to account human capital and physical capital stock. Cointegration analysis was used to analyse the long-term relationship of income inequality and human capital. Using effective labor model to get the affection of human capital on economic growth. Income inequality has a negative effect on economic growth obtained through the two-part analysis. Then panel data model is used to confirm the inclusion.