Impact Of Income Inequality On Economic Growth In Anhui Province

The relationship of income inequality and economic growth has always been the hottest issues in economics field. Not only the relationship is hard to decide, but also the income inequality is always be related with Social value problem, such as fairness and justice, etc, besides, economic growth gives us the feeling of hopeful for the future. This issue has been concerned during the period of classical economist, they survey the income inequality problem from the value. The economists have converted the way of perspective till Simon Kuznets, they begin to research based on efficiency, like the impact of income inequality on economic growth. In this paper, we also study the impact of income inequality on economic growth in Anhui province based on efficiency.First, The factor analysis shows that the Anhui's economic growth has achieved great success after the economic reform, however, income inequality is intensifying, its basically are behaved in urban and rural, area and industry income gap. We get the preliminary results that the income inequality is inversely related to economic growth by the descriptive analysis of data.Second, we have made a comprehensive study on the income inequality for the theoretical analysis of economic growth, different influence mechanism. According to the actual situation of Anhui province, income inequality through its affect of human capital,fertility to influence the economic growth, may dominates in Anhui province. Then, drawing the theoretical assumptions:Income inequality is not conducive to economic growth.The last, it's the primary study of this paper. The time series data of 1980-2009 in Anhui province was used for regression modeling, the GDP growth is the measure of economic growth as the explained variable, the urban and rural income ratio is the measure of income inequality as the explanatory variables, meanwhile, GDP per capita is the measure of human capital as another explanation variables has also been added. Check result indicates that the income inequality is inversely related to economic growth, it shows that income inequality is not conducive to economic growth, but should pay attention that the explanatory variables failed T test, it shows that the relationship has little correlation.We use a little bit more panel data of 2003-2009 year in 13 cities of Anhui for regression modeling, the GDP growth is the measure of economic growth still as the explained variable, we changed the indicator of measure income inequality for urban and rural consumer spending ratio as the explanatory variables, we set up a single index of panel data model. The inspection results under different estimates all indicate that the income inequality is inversely related to economic growth, it shows that income inequality is not conducive to economic growth in Anhui province. The explanatory variables passed T test, it shows that the relationship is significant correlation. We use the first-lagged of urban and rural consumer spending proportion as the explanatory variables, find the coefficient is also inversely related, it shows that income inequality also have negative interaction effects on Anhui's subsequent economic growth.Meanwhile, we make normative thinking based on empirical study result, not only measure the rationality of income inequality from the efficiency, because income inequality related to human felicity and the ultimate goal of human beings. The fairness and justice are the prerequisite condition to realize what has been said above, income inequality just damages the fairness and justice. So we think the research of income inequality should appropriate back to classicality.Since we study that the income inequality is negative, no matter from the Angle of efficiency or fairness, so Anhui's immediate concern is to solve the problem of serious income inequality. The issue that solve the Anhui's income inequality put forward superficial policy advice to increase farmers' investment and education, promote regional coordinating development, break down trade monopoly, etc.