Research On The Unity Of Economic Growth And Income Distribution

Now,it is a basic economic issue to promote economic growth and narrow income inequality simultaneously for all countries,including China.This dissertation tries to prove the unity of these two and search the method to get it.Institution is the basic environment for human's economic activity.As justice is the first virtue of institution and justice as fairness,this dissertation summarizes the ideal institution in a resource-scarce society as Institution Justice which embodies the principles of equality of opportunity and fair.As economic growth and income distribution influence each other directly and both are basically affected by institution,as well as from general to specific,the dissertation is organized as the following seven chapters:Chapter 1 paves the theoretical foundation.At the beginning,a general framework for economic development analysis is summarized which argues that economic development is decided by join forces of institution,technology,structure,geography,history and so on.Specifically,this dissertation puts forward a three-step framework for economic growth analysis from social-economic system,economic activity to economic result and stresses that institution is the fundamental factor to affect economic growth.Also,a three-step framework from origin,process to result for income distribution analysis is summarized.According to the origin of income inequality,it can be decomposed into four parts:natural inequality caused by the difference of person's endowment and effort,institutional inequality caused by unfairness and discrimination of institutions,structural inequality caused by the variation of productivity of different activities and other inequality.It is also stressed that institution is the fundamental factor to shape income distribution.Chapter 2 studies the influence of income distribution on economic growth.The theoretical analysis indicates that this influence presents an inverted-U shape,namely polarization and equalitarian are all harmful for economic growth,and a moderate income inequality is most beneficial to economic growth which is formed by a normal and complete-mobile income distribution.This verdict is confirmed by the empirical analysis of 33 years' cross-national and panel data covering 149 countries or regions from 1981 to 2013.Chapter 3 studies the influence of economic growth on income distribution.The long-run income distribution evolution in the modernization background is the Kuznets' inverted-U curve.The theoretical analysis indicates that Kuznets' inverted-U curve consists with the general tendency of dual-structural transformation and institutional change in the modernization process which is also supported by the empirical analysis of many developing countries' time series data from 1960s and 149 countries or regions' cross-sectional and panel data from 1981 to 2013.Thus,it is concluded that the Kuznets' inverted-U curve of income distribution is a general tendency in the modernization process of human society from tradition to modern.Economic growth increases a society's wealth and will make the income inequality decrease at last.But the East Asia Miracle indicates that the increase of income distribution in the short run is not inevitable.In the ultra-long run,the unending technology innovation will constantly engender the power to inequality.Overall,the evolution of income distribution is dependent on the nature of economic growth,the speed of structural transformation and institutional change.The fair economic growth that guarantees equality of opportunity is propitious to ameliorate inequality whenever in the short,long and ultra-long run.Chapter 4 studies how institution affects economic growth.The theoretical analysis indicates that all resources are efficiently allocated and employed in the highest value in the ideal economic growth state;institution justice is beneficial for factor accumulation,technology innovation and the efficient allocation of resources,further favorable for economic growth,and institution justice is the basic fundamental cause of economic growth.Taking each country's social justice index and latitude as the proxy variable and instrument variable of institution justice respectively,this judgment is supported by the practice of OECD and EU countries,the variation of each country's average income can be explained by the variation of institution justice significantly illustrating that the more just the institution is,the more beneficial it is for economic growth.Chapter 5 studies how institution affects income distribution.The theoretical analysis indicates that the ideal income distribution state is a normal and complete-mobile distribution with insurance and basic living allowances;just institution is not only directly favorable for the eradication of institutional inequality,but also propitious to eliminate structural inequality as quickly as possible and enhance income mobility,and make the whole income inequality mainly determined by natural inequality,thus realizing the ideal income distribution state;but in reality,as institution is impossible to be perfect just,the real income distribution always deviates from the ideal,institution justice is the fundamental cause to narrow income inequality.This judgment is also supported by the practice of OECD and EU countries which indicate institution justice increases the income share of low income and middle income group people,at the same time decreases the income share of the high income group people,at last narrow the whole income inequality.Chapter 6 concludes and gets the idea of this dissertation.The former 5 chapters'conclusions indicate that institution is the common fundamental causation of economic growth and income distribution;institution justice promotes economic growth not only directly,but also indirectly by ameliorating income inequality;institution justice ameliorates income inequality not only directly,but also indirectly by promoting economic growth.So institution justice is beneficial for the achievement of both efficiency and fairness,efficiency and fairness unites in institution justice,namely as long as a country conducts institution justice construction and promotes social justice,it will not only boost economic growth,but also reduce income inequality,realizing both targets of efficiency and fairness.By three institution revolutions,the human society's Root-Institution upgrades from egality and chaos to hierarchy and dependency,then to equality of opportunity,a totally equal and just society may be realized in the future.This forms four development periods of human society.In the resource-scarce and bounded human rationality contemporary society,the institution justice ensuring equality of opportunity is the ideal institution as it exerts every person's potential and allocates resource optimally.The Root-Institution Change is restricted by many factors,such as economic development level,people's shared mental model,population quality and path dependency.For the evolution of Root-Institution to equality of opportunity,even to total equality,a society should ceaselessly increase economic level,form idea consensus,improve population quality and ameliorate income distribution.Thus,institution justice,economic growth,income distribution and human development restrict and promote one another.The human being goes to freedom and liberalization in the synergy of these four.Based on the verdict of the unity of economic growth and income inequality,chapter 7 studies China's economic growth,income distribution and institution reform from the Reform and Opening-up.The research finds that:from the Reform and Opening-up,the institution reform to equality of opportunity is the basic causation of China's 30 more years' high economic growth;followed with the economic growth and institution reform,the natural inequality,structural inequality and institutional inequality enlarged simultaneously,resulting in a big whole inequality.Although China's institution justice improved a lot,there still exists tremendous improving space and the institution dividend is far from releasing up.China should continue to quicken institution justice construction to come true the economic potential and reduce inequality at the same time.