China's Income Gap Affect Economic Growth Research

Since 1978, Yunnan economy has grown rapidly and the residents living standards improved steadily, but income distribution gap between urban and rural residents have been continuously expanded, which seriously affected the economic development in Yunnan. In addition, domestic demand insufficiency and weakness in the market has become the bottleneck of sustainable economic growth, and how to stimulate demand government and academia to extensive has become the focus of attention. Therefore, we research the transmission mechanism of income distribution gap for residents with economic growth and consumption demand and investment demand by study and analysis, then find out the income gap and economic growth of quantitative linkage between relation, which has important theoretic value and practical significance for narrowing the income gap of residents in Yunnan province, expanding domestic demand and promoting Yunnan sound and rapid economic development.We selected the annual data of the Yunnan 1978-2009 consumer investment demand, income distribution gap and economic growth, and conducted an empirical study of income distribution gap through the consumption demand and investment demand transmitted to the whole process of economic growth between urban and rural residents in Yunnan province by using econometric method. The conclusion is: the income gap of residents will inhibit consumer demand growth in the short term and the long term, and stimulate the social fixed assets investment demand in the short term but restrain investment demand in the long term; Consumer spending growth rate and the social fixed investment growth will promote economic growth and consumer spending growth effectively effect larger.This paper includes six parts. The first chapter is simple introduction of framework. The second chapter is analyzed theoretically through the conduction mechanism process of the income gap between urban and rural areas affect consumption demand and investment demand and consumption demand and investment demand directly affect economic growth. The third chapter description the history and current situation of the income gap between urban and rural area, consumption and investment demand and economic growth in Yunnan province. The fourth and fifth chapter is empirical research. We use the VEC model basically to do empirical study of the income gap between urban and rural areas affecting consumption and investment demand, and consumption demand and investment demand affecting economic growth, respectively. The sixth chapter is summing-up of the preceding chapters of the empirical analysis results, and puts forward relevant policy suggestions.