The Contributing Factors Of Industry Income Gap And Its Economic Effects

With the reform and development of economic system, China has become one of the most powerful economies in the world economic growth, and the overall income of Chinese residents has increased steadily since the reform and opening up. But with the increasing of the income level, the income gap between residents also appears widening trend:from 1990 to 2012, the Gini coefficient of industry income of urban residents rose from 0.058 to 0.175, expanded by nearly 2 times and the average annual increase amplitude was 5.1%; While the income gap of urban residents only expanded 38.4%, with an average annual growth rate of only 1.5%.It means that the expansion speed of income gap among the industries is much faster than the income gap between urban residents, and it has become the main promoter to make the income gap of urban residents expand. More importantly, unlike the urban-rural gap and regional disparities, income gap among industries caused by some unreasonable factors such as administrative monopoly is more likely to induce psychological imbalance, thereby endangering social stability.In fact, an industry workers get high income is not a problem, the key is whether the reasons leading to the income gap among industries is reasonable. If workers remuneration depends on the different level of education, age and other personal characteristics, and it can flow freely among industries, the income gap should be regarded as reasonable; If as a monopoly industry worker, their average level of education is higher than other industries, or their work experience for high income, workers in the monopoly industry to obtain high income is not necessarily reasonable.The income gap problem in our country is more and more serious, and the income gap among industries gradually stand out from many of income gap,such as the urban-rural income gap,regional economic disparities and so on, resulting in the lower economic efficiency, deeper social class contradictions, employment and other economic and social problems. Therefore, to definite the criteria for the classification of monopoly industries, to explore and measure the formation mechanism of income gap among industries and how to decompose into the reasonable part and unreasonable part, are the keys to portray the income gap among industries in China. In addition, a moderate income gap among industries is the necessary guarantee for sustained and healthy economic development because that is a common byproduct of economic growth. However, the effect of different degree income gap on the macro economy is different in different stages of economic growth. To examine the impact of the income gap on the macro economy is helpful to correctly examine the problem of income gap among industries, which is also the starting point of this study.This study constructed the formation and evolution mechanism of the income gap among industries, and the theoretical model of effect on macro economy after analyzing the theory of income distribution and income gap among industries; and showed the development process of income gap among industries according to the reality situation of that since 1978; Then using the common measure index that be used to study the income gap among industries described the current situation of income gap among industries in China, from the industry classification to industry categories,from the national to provincial; Based on the macro and micro statistical data,this paper made an empirical analysis of factors resulting in the income gap among industries and the degree of contribution of that, and with the decomposition method based on the mean and distribution, this paper decomposed the wage earner into two parts which can be explained and not between monopoly industry and competitive industry; finally, this study analyzed the impact of the income gap among industries for economic growth, employment, consumption, industrial structure and financial development in basic situation of economical operation by using the classical econometric methods. The main findings of this study include:First, since the reform and opening up, the income gap among industries in China has shown the constantly expanding trend in general, especially after 2003, it has always smoothly fluctuated in the high level. If the difference of industry attributes is larger, the wage gap among industries will be bigger, therefore, the industry attribute is an important factor to determine the income gap among industries. There is a strong regional synchronization for the change of income gap among industries; at the same time, there are absolute P-convergence in nationwide scope and Club convergence in the central and western regions. Second, the explain degree of industry characteristics is more than 60% about income gap among industries, but this degree is reduced annually. Among which, the degree explained by industry monopoly is also gradually weakened. Third, the study used the Urban Household Survey (UHS) micro survey data to make an empirical analysis and found that there are two key factors, personal characteristics and industry characterized, leading to wage gap among industries. The decomposition results of Shapley value showed that the contribution of individual human capital is the largest to income gap among industries, it can explain about 45% of the national income gap, and the contribution of ownership monopoly is second only to human capital. Fourth, the decomposition results of Oaxaca-Blinder wage equation based on the mean value shows that, the proportion which can't be explained about income gap among industries is gradually increasing, and that of FFL wage equation based on distribution shows that, the workers which are in low income fractile are easier to obtain obvious differences in wages, because of different industries. Fifth, it exists the Kuznets inverted U-shaped relationship between the income gap among industries and economic growth in our country, and China's income gap among industries is in the left half of the Kuznets curve. The amplification of income gap among industries promote the economic growth, but compared with monopoly industry, the role of income gap among non monopoly in promoting economic growth is more significant. Sixth, the income gap among industries has a significant positive effect on the rate of unemployment, in other words, the enlargement of the income gap will increase the rate of unemployment; It has a negative effect on the rate of consumption, if the income gap among industries is too large, the level of residents consumption will be reduced; in addition, it can improve the tertiary industry output value accounted for gross domestic product (GDP), accelerating the optimization and upgrading of industrial structure; then to improve the level of financial industry development in China is also the important reason for widening the income gap, the non-balanced development of financial can significantly expand the income gap among industries.