The Research On Economic Growth And Income Distribution

Economic growth and income distribution are two of the major subjects in international economic studies. International economic experience shows that growth is always ralatived with income distribution, including China. China has achieved high economic growth during the past twenty years after Economic Reforms and the ineguality increases at the same time. Therefore, the studies on the relationship between distribution and growth of China is very important. This dissertation, studies the long-term orbit and varies of income distribution in economic development in China, based on the survey of the relationship between the two subjects in modern Western economics, discusses the effect of income distribution on economic growth in China, and analyses the approaches to improve income distribution.①This dissertation provides a brief review of modern economic growth theory, and a detailed review of endogenous economic growth theory. After defining the relative concept about income distribution, and giving the compute methods of major index, I summarize western income distribution theory development. All of these provide theory foundation for the following studies about the relationship between income distribution and growth.②The studies of long-term orbit of income distribution in economic development mainly focus on the Kuznets Inverted-U phenomenor. Inverted-U phenomenor was supported by most of the empirical analysis, however, there have been a lot of debates which are discussed in the dissertation. The studies of the effect of income distribution on growth focus on the debates about "inequality is harmful for growth", and the approaches and mechanism of the effect discussed, based on the survey of the theories and empirical. Analyses the Endogenous Fiscal Policy, Borrowing Constraints and Investment in Human Capital through which income distribution affects growth. Discusses how education system affects Growth. ③This dissertation develops an endogenous model to study the effect of income distribution on growth, based upon the Credit Market Imperfection (Galor, 1993). The model studies the mechanism of the effect of initial income distribution on growth under the Credit Market Perfection and Brrowing Constraints. The result shows that there is no effect of distribution on growth when credit market is perfect, but inequality is harmfal for growth when credit constraints are binding.④Inequality increases with economic development after Economic Reforms in China, and the causes have been put forward in this dissertation. We develops a Tri-Department model to study the Inverted-U theory which is most suitable with the Transition Economic in China.⑤This dissertation analyse the effect of income distribution on growth using cross-section data at the provincial level of China. Results suggest that inequality is harmful for growth, human capital especially male human capital improves growth and initial Per GDP is regative growth. We also test the kuzents Inverted-U theory using cross-section data; and there appears to be less empirical supported for the inverted-U pheomenon in China. Evidence shows the accumulation of human capital, especially above primer and secondary education attainment increase tends to decrease inequality.⑥Discusses the enhance effect of redistribution on growth, and how income tax, transfer expenditure among government, and investment in education adjust income distribution. Finally, we give some policy suggestion from the study's conclusions.