The Study On The Inconsistent Relationship Between Stages Of Shanghai Economic Development And Income Distribution

For a long time, our government and economists have focused on the issueof the distribution of income. Especially in recent years, China has emerged asthe world’s second largest economy and its overall economic strength has been aqualitative leap, but at the same time, the income distribution of domesticresidents hasn’t received timely improvements with economic development.According to Kuznets inverted U theory, the long-term trend of the incomedistribution is “deteriorating first, then improved”, and the turning point appearsat a higher level of economic development. Combined with the real situation,the speed of people accumulating wealth lags behind the pace of economicdevelopment, which is contrary to Kuznets inverted U theory. If theinconsistency degree is long-standing, income inequality will not be adjusted,and when this social conflict escalates, it will become an obstacle to socialisteconomic construction.Shanghai, as the central city of the Yangtze River Delta as well as aflagship of China’s economy, represents the future direction of our country, andits problems of today are China’s tomorrow in miniature. In accordance with theChinese, income distribution of Shanghai residents should be improved after theExpo period, rather than is fluctuant and stagnant, even suddenly deteriorating.Research in Shanghai’s economic phenomenon can help to modify the problemsexposing in the process of economic development in China. Therefore, to revealthe existing problems of China’s income distribution system, this thesis willinvestigate the relationship between stages of Shanghai economic development and income distribution.Although we know that Shanghai’s economy is much higher than thenational overall development level, it is not very clear that what kind of stageShanghai is in and how much advantage it has over the average state. If we wantto make suggestions about the existing income distribution structure, it seemsvaguely defined. To avoid this matter, this thesis applies “the statistical analysismodel of Kuznets”, along with data traced back from the Shanghai StatisticalYearbook, then divides the stages of Shanghai economic development from1990to2011, confirming that Shanghai has entered the ranks of the developedeconomies since the late1990s, and now is in the traditional post-industrialphase of economic growth.In Chapter Three, this thesis analyzes income of urban residents to discussthe changes in income distribution. By calculating Shanghai Gini coefficient, wecan present a summary of characteristics in income distribution of urbanresidents from1990to2011. In Chapter Four, combined with Kuznets invertedU curve and the stage of economic development, we find income level cannotkeep up with the pace of economic development. The relationship betweenincome distribution and economic development stage is uncoordinated.However, we compare the extent of inconsistency of Shanghai with that of otherprovinces, as well as referring to the development process of America, thendraw a conclusion that the degree of deviating from Kuznets inverted U curve iswithin the allowable range.In Chapter Five, for the purpose of fitting Kuznets inverted U curve, thisthesis establishes an empirical model to verify the mechanism of interactionbetween the two. Based on empirical analysis, we gradually understand thetrend of income distribution and economic development. In addition, this thesiswill deduce the turning point in order to examine whether the pace of stages ofShanghai economic development and income distribution is coordinated.According to the above theoretical and empirical analyses, the paperconcludes that the relationship between stage of Shanghai economic development and income distribution is inconsistent. For income level laggingbehind the level of economic development, as well as other pertinent findings,this thesis tries to find the reasons from the evolution of industrial structure,internal and external factors affecting the distribution of income, imperfectincome distribution system, and so on. Finally, based on several reasonssummarized above, the paper will make some suggestions to adjust theinconsistent relationship between the stage of Shanghai economic developmentand income distribution.