Redistribution Institutions And Residents’ Income Gap

In recent years, the residents’ income gap of China has reached the level of thecordon, and there is an upward trend. Expanding income gap by acting onconsumption, investment and other factors affects economic development and socialharmony of a country. Therefore, that how to reduce the residents’ income gap is oneof the discussing hot issues in today’s government departments and scholars. Thereasonable adjustment of income distribution relations in Chapter32of “12thFive-years Plan”, in2011, point out,“redistribution should pay more attention tofairness, accelerating to form a reasonable and ordered income distribution pattern,making efforts to enhance the proportion of resident’s income in the National incomedistribution pattern, increasing the proportion of compensation of employees inprimary distribution, it needs reverse the growing income gap as soon as possible”,which also highlights the regulatory role of redistribution to income gap.The process from residents’ primary distribution income to distribution income isan adjustment process of redistribution institutions, in which the government plays aleading role. Therefore, the process must be treated as the main means formulating byformal institutions of the government. Institutions affect wealth and organization,thereby creating new economic consequences. So, studying every redistributioninstitution to regulate the income is very important to discuss how to reduce residents’income gap. Every distribution institution can regulate residents’ income gap bychanging the chance of market competition or economic consequence. So we can say,if we formulate better redistribution institutions, it can change the residents’ incomegap, which is the primary distribution brings out, through a series regulatory role.Compared to China, Statistical data analysis shows that the United States also has abig residents’ income gap. Scholars agreed that people in the United States have lessfeeling on it compared to China is because its higher economic development. Besides,the paper finds out that there is a small residents’ income gap after the primarydistribution in the two countries, through redistributing the gap reduced in the UnitedStates but it was even increased in China. In other words, redistribution mechanism inChina is a reverse adjustment. After the redistribution, why it was different that themoderating effects of the residents’ income gap between the two countries? This ismainly due to the difference between government-led redistribution institutions. So the paper work hard to answer why the different consequences, by comparing the twocountries’ redistribution institution (it’s mainly included direct taxes institutions,social security institutions, and financial transfer payment institutions). Throughutilizing the better respect of the redistribution of the United States and combining thenational condition of China and local informal institution, it recommends somerelative policy proposal to reduce Chinese residents’ income gap.