Housing Price, Income Gap And Industrial Upgrading

In the12th Five-Year period, income allocation system reforms and the adjustment of industry structure are the subjects of China economic development.So what are the initial triggers at the course? Where the starting point of our reforms and restructures? This paper starts with house prices concerning livelihood, researching the expanding of income gap and the changing of industry structure.The society is divided into two classes:relatively rich and relatively poor.The relatively rich not only fulfill their own housing demand,but also invest in real estate market, and then obtain considerable investment income,which will further widen the income gap between rich class and poor class. This income gap make the two consumer classes have different consumption decision.The rich class will increase the purchase of high grade products, financial innovation products and service products, promoting the growth of high-level industry. However, the poor class also have the demands for houses. Most of their disposable income are occupied by down payment and mortgage, and the remaining mainly pay for the necessaries of life, which have an inhibitory action on traditional industries. As the circular flow of cause and effect, industry structure may occur adjustment and transformation.This paper emphasizes on combining the housing price, income gap and industrial upgrading into one research framework, confirming the mechanism among the three aspects and measuring whether the house prices have an influence on industrial upgrading through income gap. This paper analyzes and verifies the mechanism based on a systematic panel model. It concludes that the housing price and income gap are a two-way causality and interact each other. Moreover, the housing price will inhibit the development of the secondary industry and will promote the development of the tertiary industry. The influences will be different when considering the regional economic character.