A Study Of The Impact Of Chinese Income Inequality On Economic Growth

Since the reform and opening up, Chinese economy has made great achievements, which is be called the "Chinese miracle". But at the same time, the degree of inequality of income distribution has also gradually deepened. Depend on the China’s actual conditions, there are two facts are worth our attention:Firstly, the income inequality of China has truly increased. Secondly, the current Chinese social polarization is worsening. A few people owned a great share of wealth, while low-income class faced serious livelihood problems, such as employment, medical care, social security and so on. The destabilizing factors caused by growing social gap are also increasing.This article base on these two facts, researching the influence about distribution of income inequality on economic growth, getting the following conclusions:In the beginning of the reform and opening up, the income inequality break the shackles of the egalitarianism of productivity, and promote China’s economic growth through demonstration effect and the effects of competition. However, with the expanding income gap in the1990s, this positive incentives continue to weaken, while negative effects are becoming apparent and occupy a major position. The widening gap of income distribution play a negative impact on the household consumption, human capital accumulation, and social stability, which hinder the long-term economic development.This study has based on the collection, sorting, absorption of the previous experience and research. Compared with previous studies, the innovation of this paper is mainly reflected in following points. The first, based on the actual situation in China and taking into the special dual transformation of our country, we study the endogenous mechanisms of income distribution on economic growth from a new perspective. Second, the theoretical research and empirical studies are combined in this paper. We study the transmission mechanism, such as the financial intermediation, human capital, social instability, to reveal the influence of income inequality on economic growth, and also made a reasonable proposal.