Research On The Impact Of Financial Openness On Income Inequality-Analysis From The Perspective Of Production Factor Rent

Since the collapse of the Bretton Woods system,financial reforms have been promoted globally from developed countries such as the United Kingdom,the United States and Japan.With the deepening of financial openness and the flow of cross-border international capital,financial openness has become an important feature of the current world economy.At the same time,the increasing of income inequality on a global scale has become one of the great challenges faced by policymakers in both developed and developing countries,especially after the 2008 global financial crisis.The income gap between urban and rural areas,regions,occupations,industries,and groups of people is also rapidly widening,and the non-standard and unfairness of income distribution continues to deepen.The income distribution problem brought about by financial openness has become one of the hot topics in academic research.Although existing studies have focused on the effects of functional income and scale income on income inequality,they have ignored the underlying causes of inequality and the motivations of market participants to pursue rents.In today's financial globalization,therefore,under the background of rising income inequality,analyzing the income distribution effect of financial openness from the perspective of factor rents help to further reveal the condition of financial openness to reduce income inequality and its path its role as well as the deep reasons and may provide new solutions to the "poverty trap" of inequality theory.Based on the objective facts of imperfectly competitive financial markets and factor markets,this paper conducts a systematic theoretical model analysis and empirical research on how financial openness affects the rents of production factors and income inequality.A dynamic iterative model is constructed on the basis of social stratification theory,institutional change theory,and rent theory.It is proposed that financial opening affects income inequality through the rents of production factors.Based on the crossborder macro data of 106 countries from 1970 to 2017,the production function method is used to measure the rents of production factors,and on this basis,the impact of financial openness on the rents of production factors and income inequality is empirically explored.In order to solve the problems of error,publication bias and subjective bias of a single research method,this paper also uses the meta analysis method of evidence-based analysis to make a secondary quantitative analysis of the existing research results,and makes a comparative analysis between developing countries and developed countries,and further investigates the heterogeneity and causes of income distribution of financial openness.Combined with the results of theoretical analysis and empirical research,this paper explores the development path of continuing to deepen financial opening and related institutional reform and policy support,so as to make full use of the advantages of financial opening and avoid its possible negative impacts.The main research conclusions of this paper are as follows:(1)The dynamic changes of capital rent and labor rent caused by the financial reform are the deep-seated reasons for the effect on income inequality.Based on the rent theory,social stratification and institutional change theory,as well as the driving force that economic participants seek rent interests,the institutional reform and financial market reform brought about by financial reform cause the changes of capital rents and labor rents by reconstructing the equilibrium market of dynamic economy,which is the deepseated reason for the effect on income inequality.No matter whether financial market and factor market are considered at the same time,the income inequality of open economy always decreases with the increase of capital rents,and increases with the decrease of labor rents under certain conditions.(2)Financial opening will reduce income inequality,and the effect of financial opening on income inequality is affected by the other influencing factors.Based on the cross-country data of 80 countries from 1990 to 2017,this paper conducts panel regression and a variety of robust testing methods to confirm that financial openness will reduce income inequality.In order to solve the problem of bias or selection bias in single theoretical research or empirical research,this paper uses the meta analysis method of evidence-based analysis to conduct quantitative integration analysis on 23 independent empirical studies.The regression results of the meta-analysis verify that financial openness and income inequality are negatively correlated with unbiased average effect values.(3)Financial opening will affect income inequality through the mechanism of capital rents and labor rents.This paper uses the intermediary effect model to prove that financial liberalization reduces income inequality through capital rents and labor rents.Labor rents have a certain masking effect on the income distribution of financial openness.When mechanisms of capital rents and labor rents work together,the mechanism of capital rent and labor rent can explain 84.21% of the effect of financial opening on income inequality.In the mechanism of financial openness on income inequality,there is a multi-step and multiple action path that affects income inequality through the crowding-out effect of capital rents on labor rents.(4)There are some differences in the effects and mechanisms of financial openness on income inequality in countries with different development levels,and the difference in the impact mechanism of financial openness in countries with different development levels is the deep-seated reason for the heterogeneity of its impact on income inequality in countries with different development levels.Financial openness in developing countries reduces income inequality mainly by increasing capital rents,while financial openness in developed countries increases income inequality mainly by reducing capital rents.The mechanisms of capital rents and labor rents in developing and developed countries are opposite in effect,which leads to different effects of financial openness on income inequality in developing and developed countries.(5)Institutional quality is an important moderating variable in the mechanism and influencing factors of financial opening on income inequality.Institutional quality plays an important role in regulating the whole process of the chain-type multiple transmission mechanism of capital rents,labor rents and income inequality.Moreover,the metaanalysis method's heterogeneity analysis still concludes that the environmental variables of institutional quality have an important influence on the correlation between financial openness and income inequality.The theoretical and empirical research results of this article have some policy implications for deepening the financial opening reform,improving the institutional environment,financial market development,human capital investment,and redistribution system.In addition,in view of the limitations of the research in this article,the ideas and directions for further research in the future are proposed.