Income Distribution And Economic Growth Under The Assumption Of Saturated Consumption

Economic growth and social income distribution have always been two important parts in the economics studies. After the U.S. subprime mortgage crisis in 2008, China's economy had a great impact that import orders reduce suddenly, so that external demand for Chinese products gave a sudden reduction, unemployment become a social problem to be solved. Under affected by external circumstances, to keep the economy continues to grow. It is the inevitable requirement to replace other social needs of the foreign demand. In economy overall domestic demand has two aspects which one is investment demand, the other is consumer demand. After the subprime mortgage crisis, investment demand rapid start. In theory, including the large-scale infrastructure investment projects, when it is increase current demand, it would also increase the production capacity of future social. If consumer demand can not be effectively increased, the relative lack of demand for the next issue will become more prominent. It is obvious increase in consumer demand is the key of to solve problem of the relative lack of demand. However, the domestic consumption share of GDP, is only about 50% at present, and be in decline for many years. The reasons for sluggish consumer demand, many people think that income limit is one of the important reasons, recognizing that to increase domestic consumer demand must be to improve income distribution.In the West Mainstream economics, from the micro perspective, the distribution of income is the reward of the production factors in the production of the marginal contribution in the market economy, which is a social Pareto optimal allocation; from the macro level, social income gap with the relationship between economic growth, there has been two conflicting views and so that it is lack of a unified understanding of to improve income distribution. The improvement of income distribution usually be considered a kinds of social and moral aspects. Can be seen, why should improve income distribution, it is need a theoretical support.In the theory of classical economics, Consumer demand there are two important axiomatic assumptions that one is non-satiation consumption and the other is strict monotonicity consumption. In axiomatic assumptions, the utility of consumer has increased with the increase consumption and consumers will be used up income except investment in the pursuit of utility maximization process. In the two-sector economy in which does not consider foreign trade and the government, the gross national income, investment and consumption only be two parts which is not for investment income must be used for consumption. So there is no issue of effective demand, but it is not consistent with real phenomenon.The article thinks that exist satiation of consumption according to the law of diminishing marginal consumption. Under the precondition of satiation assumption, there are some innovative research on micro theory of consumer utility and macro theory of consumer demand. Think that inadequate consumption due to limited saturated consumption of the high income groups and limited income of low-income groups together constituted. In the event of lack of social demand, and can not increase the saturation of high-income groups, to reduce the income gap and to improve income distribution increased consumer demand for low-income groups can effectively increase the total social consumer demand, so that economic growth get rid of the constraints of lack of demand, to provide theoretical support of to improve the income gap.In the premise condition of insufficient effective demand, the article use of static analysis methods, discusses through a variety of measures to increase consumer demand and investment demand in order to increase the gross national income, obtained it is the effective way to increase national of total revenue through improving income distribution in the long run if it is lack of demand. Furthermore, use the data to verify this conclusion. The article using dynamic analysis methods, assuming a production function based on the demand-income fitting curves, respectively, with the inflection point on the labor surplus consumption-income turning point of the linear fitting curve of the various combinations of two dimensions, analyzing the economic the path of growth and income distribution trends. Found from the analysis, as the large populous country in the transition process prone to greater income gap in the market economy, only the surplus labor is absorbed ended, low-wage workers can be improved rely on market instruments. Social income gap presents Kuznets inverted "U" shaped curve is not necessarily inevitable, Theoretically proved that under certain conditions there is need for regulation of income distribution..