Evolution Of The Industry’s Income Gap And Its Economic Effects In China

The too much income disparities among different industries has drawn the attentions from all walks of life, but the quantitative researches in the academic world with some systematic methods on such problem are rare, and most of the current literatures are researches based the view of system factors.There are many factors affect the industry income gap, and we have chosen the monopoly level differences, the industrial level differences and differences in labor standards as the industry’s income gap to be analyzed. In order to make a more systematic analysis, I collect data of19industries between2003and2010to get the income gap between the status quo trends, causes and impact of China’s industry and the analysis showed that the wage gap in recent years has expanded. The industry’s monopoly level differences and the difference of the level of industrial level are the main causes of industry wage differentials.In order to analysis the economic effects of the industries’income gap on consumption, investment, financial development, economic growth. I use the stationary test in econometrics, cointegration, Granger causality, vector auto-regression model, impulse response function method. The effects of test results show the industries" income gap effects of China’s consumer spending in short-run is positive, but the medium and the total effect is negative; The effects of spending on investment and financial development in short-term, medium-term and the overall effects are negative; on economic growth, whether it is from the short, medium, or the overall results, the effects are negative. Finally, policy recommendations on reducing the industry income gap is regulating monopolies income distribution, improving the wage distribution system, establishing a sound social security system, and vigorously developing the tertiary industry.