The Study Of Dynamic Effects On Income Distribution Under Different Educational Systems

With the rapid development of China’s economy and the diversification ofincome distribution, the income gap is widening, which also leads to many socialproblems. In the condition of labor market segmentation, the initial and unequalwealth distribution increases the income gap effect of education investment. It isgenerally believed that education investment is one of the key reasons for thepersistent inequality of income distribution from empirical and theoretical research.First, the paper analyzes the educational status and existing problems of China,and then briefly describes the impact mechanism of education on income distribution.On this basis, we build a three-sector theoretical model of three overlappinggenerations including consumers, manufacturers and government. On the basis of theexisting model, this paper adds the dual structure of labor market characteristics intothe model to discuss and briefly compare the different effects of human capitalinvestments on a long-term dynamic equilibrium of income distribution under twodifferent educational systems, that is, the private educational system and the publiceducational system.The research shows that education is an effective way to get rid ofpoverty for individuals. However, under different educational systems, the impacts ofeducation investment are different. In the long term, public educational system canhelp non-skilled individuals to get rid of poverty and eliminate the income gapbetween skilled workers and non-skilled workers. But under the private educationalsystem, long-term convergence of income distribution will be different due to theminimum wage level and the human capital wage rates: the persistent inequality mayexist or even worsen, or be eliminated, then economies will be in poverty trap orachieve common wealthy. By comparing with the long-term convergence of incomedistribution in different educational systems, the article argues that the more perfectthe public educational system is, the more beneficial to improve inequality of incomedistribution.Combining the article’s findings with the educational system reality that oureducational system embraces the bias towards the family educational system, it can beconsidered from the following aspects to narrow the income gap: increasing intensityof education investment efforts and improving educational system; adjusting wagesystem and opening the labor market; speeding up balancing urban and rural developments and changing the dual structure; regulating income distribution policyand focusing on equitable distribution.