The Economic Analysis Of The Mode Of Providing Public Service

'Efficiency first,equity balanced' is the guiding rule of public service in China in a very long period.High income cohort acquires higher quality and quantity of public service,and low income cohort gets lower under this guiding rule.So the income disparity is broadened as compared to the initial income distribution disparity.The income disparities between city and town,among the towns and across regions have been out of international standards in the current period in china.Does our mode of providing public service need to transform from 'efficiency' to 'equity' as the western countries do? Will there are any theoretical foundations behind the transformation?Firstly,we analyses the positive and negative impact that income disparity would have on economic growth.Then we examine the fact that the individual consumption for public service(education,health care,culture and entertainment,social security and transportation and communication,and so on) is positively related to his income level under the current public service system which is based on cost sharing.Lastly, we develop a theoretical model based on Diamond's infinite overlapping generation model and analyze the result under inequality and equality in sharing public service. We conclude that 1.the house will invest more time to accumulate the human capital under inequality model;2.Ideal 'Utopia' could be achieved under the equality model. But it cannot be achieved under inequality model without certain subjective conditions;3.The path of gross economic product and house income depends on the increasing/decreasing returns of human capital in scale.4.The influence of the initial income disparity to economic growth is correctly negative under two models;5.The mode of providing public service has different effects on economic growth under different income disparities.All the findings explain the confronting results in empirical studies for income disparity and economic growth.The findings also support the transformation from 'efficiency' to 'equity' for public service for the current period of great income disparity.