The Measurement Of The Proportion Of Middle-Income Group In China And The Factor Decomposition Of Its Change

The 10th meeting of the Central Finance and Economics Commission was held on August 17,2021,which emphasized that “Expand the size of the middle-income group,raise the income level of the low-income group,and build an olive-shaped social structure”.Middle-income groups play an important role in maintaining social harmony and stable development.The expansion of the middle-income group requires not only clarifying its conceptual meaning and the method of defining the criteria,but also the reasons behind the changes in its proportion.Find The method of increasing the proportion of middle-income group is important for China to achieve common prosperity and let people better share the fruits of development.Based on this,the following research work was done in this thesis.Based on the compilation of existing literature,the conceptual connotation of the middle-income group and the determination of the definition criteria are explored.This thesis uses CGSS(China General Social Survey)data as research data to conduct descriptive statistical analysis of national,urban and rural as well as regional residents’ income.The 2005-2018 residential income distribution curves are fitted by Using the kernel density estimation method;the proportion of middle-income groups in China as a whole and in each region were measured using the absolute and relative criteria respectively.The macroscopic factors influencing the change in the proportion of middle-income groups are then decomposed from the national,rural-urban and regional perspectives,and the effect values of each factor are calculated.Finally,the micro-influencing factors of middle-income group’s income such as gender,age,area of residence,and type of occupation were selected to build a quantile regression model,and the results of the model regression were analyzed.The main findings of this thesis are as followings.Firstly,the middle-income group should be a concept measured by income and should be distinguished from the traditional “Middle Class”.And the criteria for defining middle-income groups should satisfy three conditions: automatic adjustment can be achieved,the differences between regions can be reflected,and each income group should be reasonably delineated.Secondly,the descriptive statistical analysis of the data shows that the income level of residents has been steadily increasing,but the overall income distribution shows a trend of “Right-skewed” distribution.Most of the income distribution curves fitted by the kernel density estimation method show “Right-skewed” and“Multi-peaked”distribution.From the results of measuring the share of the middle-income group,it is clear that the absolute standard of the average daily income of $10-100 of the World Bank is not suitable for defining the middle-income group in China.From the findings of this thesis,it’s reasonable to determine the definition criteria of middle-income group through 0.75～1.5 times of the median income.Compared with the developed countries in OECD member countries,the level of the proportion of middle-income group in China is still low,only about 30%.Thirdly,the results of the dynamic decomposition of the macro influences on the change in the proportion of middle-income groups show that the economic growth effect has the largest value among the three impact effects—economic growth effect,income distribution effect and standard effect,while the income distribution effect is basically negative.Economic growth promotes the increase in the proportion of middle-income groups,while income distribution acts as a disincentive to the increase in the proportion of middle-income groups.Fourthly,from the quantile model regression results,the factors of gender,age and education in personal characteristics,the factors of type of occupation and nature of establishment in work situation,and the factors of having a side job and being involved in health insurance in other features all have an effect on the income level of the middle-income group.Based on the findings,this paper puts forward several policy recommendations in light of the actual situation in China.First,raise the income level of low-income groups and strictly regulate the wage levels of different occupations.Secondly,reduce the income gap among residents,improve the pattern of income distribution,and promote the development of economically underdeveloped regions.Thirdly,improve the employment environment for young people and protect the livelihood of older groups.Finally,increase financial investment in education and improve the overall quality of residents.