Technical Change And Income Inequality:An Empirical Analysis

China’s economy has entered a new normal stage, technical change plays a more and more important role in raising labor productivity and maintaining stable economic growth rate, income inequality caused by technical change can`t be ignored. Income inequality will lead to consequences like social stratification, rich and poor classes opposition and resource misallocation, inequality is the source of many social, economic, political problems. Research on the mechanism of how technical change affect income inequality will help us tackle the dilemma of justice and efficiency caused by economic development, and keep a stable and active economy.Income inequality has always been a research hotspot, existing literatures usually measure income inequality by skill premium, few have considered the relationship between Gini index and technical change, and they`ve all concentrated on empirical analysis, failed to provide a theoretical framework. This paper analyzed the relationship between technical change and income inequality on the basis of Gini index, established a framework of technical change and Gini index based on skill-biased technical change. With a time-fixed effect panel regression model using 2005 to 2012 urban data of 19 Chinese provinces, the empirical analysis result indicates that technological progress leads to income inequality, unemployment rate and GDP per capita are positively related to Gini coefficient, population dense are negatively related to Gini index.