Study On Efficiency, Equity And Their Economic Consequences Of Compensation Distribution

In 2010, China's Gini coefficient is close to 0.5, which is not only beyond the international warning line, but also higher than the level of some developed countries, such as the United States.At the beginning of 2011, the People's Daily continuously issued four articles focusing on income distribution gap, which pointed out that the slower growth in labor income and the growing income gap have become increasingly prominent.The income gaps is normal, but unreasonable and unjust gap will lead to social instability.Since reform and opening, China's economy has developed rapidly. However, income distribution gap is widening,and vulnerable groups is growing,which is inconsistent with the objectives of harmonious society and common prosperity. How to handle the relations between efficiency and equity in the income distribution has become a serious social problem.Reasonable income distribution system is not only an important manifestation of social justice, but also helps to promote social harmony and build a moderately prosperous society. CPPCC Chairman Jia Qinglin cleardthat the large income gap affects social stability. Professor Yang Yiyong believed that the disorder during the initial distribution of income contributed to China's widening income gap. From 1990 to 2007,the compensation-GDP ratio is declining from 53.4% to 39.73%.Meanwhile, the corporate balance-GDP ratio is on the rise from 21.9% to 31.29%.The "wages erosion of profif" which people were worried after the reform and opening up has been transformed into "profit erosion of wages", and astronomical executive pay has been common. The"executive pay erosion of profit "and "profit erosion wage" is co-existing, which reflects the inequitable distribution in the companies.Micro-enterprises constitute the macro-economic subsystem, therefore, the macro-distribution of national income will be subject to micro-enterprise distribution. The distribution of micro-enterprise is the initial distribution, involving many stakeholders, such as the state, enterprises, shareholders and employees. The income distribution between senior managers and ordinary workers will will not only affect the labor enthusiasm of employees and its own development,but also affect income distribution,the consumption level and the development of the society. Therefore, it is of great significance to properly handle the relationship between efficiency and equity.At present, many literatures discuss the relationship between efficiency and equity through the normative research methods,but few literatures involve the relationship between efficiency and equity during the companies'compensation distribution from the point of view of empirical research. Therefore, it is theoretically and practically important to research the efficiency and equity during the compensation allocation by empirical methods.What affect the compensation distribution efficiency and equity? what will be the economic consequences for compensation distribution efficiency and equity? How to achieve the effective integration of compensation distribution efficiency and equity? They are not well be answered in the existing literatures. This paper will use Marxist theory of distribution as the theoretical basis to study the factors that affect the allocative efficiency and equity by empirical research and normative research methods, discuss the economic fundament of the combination of efficiency and equity, the relations that should be properly handled and the concrete measures.The study will supply theoretical support and empirical evidence for reasonable pay allocation policies,and provide guidance on the reform of income distribution system for the country.This paper consists of seven chapters.Major contents of each chapter are outline as follows.Chapter 1 is the introduction,which briefly introduces the research background and significance of this paper,describes research contents and their structural arrangement,talks about research methods employed by this paper,and summarizes the points of research innovation.Chapter 2 is the literature review.This chapter summarizes and makes comments on the relevant literatures home and abroad, sums up the shortage of the studies,and identifies the reseaech opportunities through literature review,being prerequisite for the following reseaech.Chapter 3 addresses the theoretical analysis and system background.This chapter has the following three parts. The first part discusses the theoretical basis about the Combination of efficiency and equity of compensation distribution,including Marxist theory of distribution, compensation management theory, theory of the relationship between efficiency and equity, agency theory, equity theory and other theories. The second part reviews the process of internal compensation distribution system reform and analyzes its objective environment and institutional background. The third part analyzes the status of the current income distribution and the internal state of compensation distribution.Chapter 4 analyzes the enterprise compensation distribution efficiency. Firstly,this chapter studies the factors which affect compensation distribution efficiency by empirical methods. Secondly, this chapter tests the economic consequences of compensation distribution efficiency, including the impact on corporate sustainability and regional economic development.Chapter 5 analyzes the enterprise compensation distribution equity. Firstly,this chapter empirically studies the factors which affect pay gap. Secondly, this chapter studies the factors which affect compensation distribution equity by empirical methods.Thirdly,this chapter further tests the economic consequences of compensation distribution equity, including the impact on corporate sustainability, consumption capacity, regional inequality and economic development.Chapter 6 discusses is the combination of efficiency and equity.This chapter analyzes the economic consequences of the combination of efficiency and equity, then discuses the economic base,relations and specific countermeasures.Chapter 7 is the conclusion, shortcomings and follow-up study.This chapter is a Summary of the full study, highlights the main conclusions of the dissertation, describes the shortcomings, and points out the direction for further research.The innovation points of this dissertation are mainly embodied in the following aspects:Firstly,based on the special background of the transition economies of China,this dissertation conducts an comprehensive study on the compensation distribution efficiency and its economic consequences.Few literature empirically studies the distribution efficiency,this dissertation takes the Marxism theories as the basis, and introduces EVA to study the factors that affect compensation distribution efficiency and its economic consequences. The research will enrich the existing literature on the issue of compensation.Secondly, based on the trend of growing income gap, the empirical study is undertaken to analyze the equity of compensation distribution in the enterprise.The domestic literatures that study pay gap are not rare, but few research concerns about the distribution equity. This dissertation focuses on the distributive justice between executives and ordinary workers.Under the guidance of the Marxist distribution theory, this dissertation defines the compensation distribution equity and further improves its metrics,then conducts empirical analysis of the factors that affect the equity of compensation distribution and its economic consequences.which can extend the research concerned.Thirdly,the Communist Party Congress report particularly stresss it is necessary to properly handle the relationship between efficiency and equity in the primary distribution and redistribution. This distribution analyzes the different combination of efficiency and equity and its consequences.The result showes that a reasonable combination can lead to a positive economic consequences of micro-and macroeconomic consequences. The conclusion is important, which will help to encourage enterprises to improve the governance structure and establish reasonable compensation allocation policies Meanwhile,it can supply guidance on the reform of the national distribution system. According to the results, this dissertation further discusses the economic foundation of combination of efficiency and equity, the relationship that must be handled well, and specific measures so on, which will enrich the relevant studies.