The Theory And Empirical Research On Income Redistribution's Contribution To Economic Growth

By the process of reform and opening-up, China has enhanced the economic ties with more and more countries from all over the world, and has been part, especially important, of global market economy gradually. However, opportunities always accompany with the challenges. We know that the subprime crisis born in America has spread to most countries, including china. At the special time, the government must take on the essential responsibilities, as a supervisor of economy and society, intervening in the national economy by monetary and finance policies, which brings important revelation in this article.Firstly, this paper based on the public product theory, analyses the Pareto improvement of income redistribution. Secondly, the impact of public investment and public consumption affecting economic growth in income redistribution has been indicated, by expanding endogenous growth model and C-D model, using economy growth index. Thirdly, the conclusion above has been validated according to experience data of China and USA. Finally, this paper has found the character of income redistribution, and indicated the transmit approach of reassigning working on the growth, which gives reference for government to make and adjust the distribution policies in reason.The research conclusions are suggested: first of all, from the point of view of public product theory, the income redistribution has puzzle in Pareto improvement. Secondly, there has negative correlation between the public investment and economic growth, but positive correlation between the public consumption and economic growth. Thirdly, the structure of income redistribution is irrational: administration expenditure is at a high level while the social security cost deficiently. Finally, there are two affecting approach, directly or indirectly by personal way.Depend on the status of our national income reassigning, departments should adjust the distribution policies, cut down the redundant public investment, boost the public consumption, and optimize the structure of income reassign, for stimulating domestic demand and keeping economy sustainable growth.