Prosperity And Vulnerability: Middle-income Group Structure Change Research

After more than 40 years of reform and opening up,China’s middle-income group has been growing and becoming the backbone of society.The middle-income group is the "stabilizer" of society,the "barometer" of income distribution pattern,and the "ballast" of social risks.Expanding the size of middle-income group is an important means to realize common prosperity.To fully understand and grasp the current situation of middle-income group’s size development,structural change pattern and mobility dilemma during the transition period is a prerequisite to follow and practice the path of "adjusting high,expanding middle and increasing low" to realize common prosperity.Based on this,this paper proposes a "dynamics-structure-flow-divergence" analysis framework to study the middle-income group during the social transition period.The paper takes the structural changes of middle-income groups as the object of study,understands the mobility and internal distribution of middle-income groups,explores the influence mechanism of structural changes of middle-income groups and the solution to the development dilemma,and proposes policy recommendations.This paper uses CFPS data and national statistical yearbook to select four periods of 2012,2014,2016 and 2018 to form a balanced panel.Firstly,the size of middleincome groups and income mobility are measured in the four periods,and the distribution within middle-income groups in different periods is analyzed.Secondly,based on the panel data from 2012-2018 and 2014-2018,the OLOGISTIT model is applied to test the influence mechanism of middle-income group changes.The findings of this paper are as follows:First,using the criterion of middle-income group’s annual per capita income of29,083-12,118,000 yuan and the typical three-person household’s annual income of87,249-363,540 yuan,we obtain a middle-income group share of 28.63%,a low-income group size share of 69.34%,and a high-income group share of 2.04% in 2018.The middle income standard is divided into three equal parts to obtain the income standard of low,middle and high middle income groups,and after measurement,we get that in2018,the middle and low income groups account for 70.54%,the middle income group accounts for 21.62% and the high middle income accounts for 7.84% of the middle income group.The middle-income group has a "pyramid" structure.Most of the groups in the lower middle income group have just reached the middle income line and are the marginal groups of middle income,which are very easy to fall out of the middle ranks,which is the root of the vulnerability of middle income group in China.Second,income mobility of different subgroups is obtained by income transition matrix for income quintiles grouped by CFPS data from 2012-2018,and the results show that the probability of being in the lowest 20% income group staying in the original income bracket increases from 44.67% in 2012 to 62.9% in 2018,indicating that the possibility of upward mobility of the low-income tier is becoming less and less,while the highest income group are increasingly likely to maintain their position in the income tier.In other words,the channel of upward mobility for the low-income group has become narrower to a certain extent,and there is a certain trend of class consolidation.Third,based on the "dynamics-structure-mobility-divergence" framework,four research hypotheses are proposed for the analysis of middle-income groups in China and all of them are tested.The empirical results show that:(1)the probability of upward mobility to middle-income groups is higher in the process of institutional change,which provides an endogenous impetus for China’s economic development and thus promotes the expansion of middle-income groups in China;(2)the transformation of industrial structure and layout have a positive impact on the expansion of middle-income groups,and the more reasonable the industrial structure of regions or provinces,the more upward mobility of low-income groups to middle-income groups;(3)in the initial period,the middle-income groups have a positive impact on the expansion of middleincome groups.(3)In the initial distribution,compared with stable employment,middle-income groups in unstable occupations are at a disadvantageous position in the market distribution and are more likely to move downward in unstable occupations;(4)In the redistribution,the more social and occupational security programs they have,the more they can maintain their middle status and thus achieve upward mobility.After grasping the influence mechanism of the change of middle-income structure in China,based on the basic concept of common prosperity,we propose suggestions for the high-quality development of middle-income groups: insisting on expanding middleincome groups at the macro level,optimizing and adjusting the internal structure of middle-income at the micro level,and improving the occupational security system,so as to finally form a middle-income group with both quantity and quality.