What The Obstacle In Household Income Growth

The proportional relationship among the three departments of government, business, residents in the distribution of national income not only reflects the pattern of economic interests among the three departments, but also could directly affect the operation of the national economy because of the different economic behavior of these departments. Since the mid-1990s, along with the sustained and rapid economic growth, China’s household income has been decreasing; however, the government and business sector income gradually increase year by year. This unreasonable phenomenon not only becomes the focus of the government, but also is one of the important practical problems that the economists should not shun.Firstly, this dissertation uses the original data of flow of funds accounts from1992-2008to analysis the trends of the income share of residents. It shows that both in the initial distribution and redistribution, the proportion of residents’income rose slightly from1992to1996, but were gradually decreasing after1996. The proportion of residents’ income in the initial distribution and redistribution in1996were respectively66.48%and68.44%, and in2008, were57.23%and57.11%, a decrease of9.25and11.33percent. However, the government and corporate sector have been gradually increasing since1996.Secondly, the thesis adjusts the original data and uses the adjusted data to conduct quantitative analysis. It shows that on the one hand, the government’s actual income in the distribution of national income is bigger, and grows faster, and it become more obvious that the share of residents’income is small and declining; on the other hand, the ratio of profits of the state-owned enterprises to national disposable income increased by23.8times from1998to2007, and the ratio of non-state-owned enterprises’ disposable income to national disposable income was12.76%in1998and12.99%in2007, nearly no increase at all. A brief international comparison also shows that the share of our residents’ income is not only much lower than that of the developed countries, but also lower than that of Poland, Hungary, other transition countries and Japan, south Korea.Thirdly, the thesis analyzes empirically the reasons for the decline of the share of residents’ income. The results show that in addition to the declining labor share in GDP and the rapid growth of the business sector, the increase of government revenue in GDP and the rapid growth of the state-owned enterprises are also two important factors. The expansion of state-owned enterprises and the strengthening of their monopoly power pose a serious impediment to the development of private enterprises, and also have a negative impact on residents’ income. In addition, the government’s income which comes from outside the system, the lack of the property income of residents, and the negative transfer income in redistribution are all important facts that should not be overlooked.At the end, this dissertation makes a summary and explores relevant policy recommendations:strictly regulate government’s non-tax revenue, put non-tax revenues into budget management; taxation according to law; implement structural tax cuts; carry out the reform of state-owned enterprises to promote a conducive environment for private business; try to increase workers’wage and salary; try to increase the total property income, and diversify the access to get it.