Financial Depression、Industrial Structure And Income Gap

After The Reform and Opening-up, with the booming of China’s economy and the adjustment of the industrial structure, especially the growth rate of GDP was more than8%in most years, residents’living standards also got great improvment, but it is worth pay attention to that the trend of income gap in China become wider and wider, which has affected the long-term stabilization of the social and economic development. The upgrade of industrial structure, especially the improvement of proportion of the second and the third industry in the national economy, can promote surplus labor who work at agriculture move from primary industry to the second and third industry, and improve the income of the labors who work at agricultural sector, and narrow the income gap between agricultural sector and modern industry department. If we want to maximize the function that the upgrading of industrial structure narrow the income gap, it is necessary to speed up the adjustment and upgrade of industrial structure upgrade, and move more agricultural surplus labor to modern industry department that productivity is higher. However, the upgrade of industrial structure need a lot of financial support, so the development of the financial sector can make a huge supporting effect on the adjustment of industrial structure. Theoretically, financial support effect on the upgrading of industrial structure, and the upgrade of industrial structure can also narrow the income gap. However, only under the perfect market mechanism, can financial support the upgrading of industrial structure. In this article, therefore, under the background that financial repression phenomena commonly exist in our country, to research and analysis the influence and mechanism of the industrial structure changes on income gap, and to provide some policy suggestions on narrowing the income gap in our country on the basis of the research conclusion, has certain theoretical and practical significance.By building the mathematical analysis model, this paper shows that financial depression policy may hinder the upgrading of China’s industrial structure, which is mainly because the financial repression policy that taking interest rate regulation and credit rationing as the main performance will reduced the proportion that savings shift into investment and the efficiency of capital usage and configuration, thus affect the formation of industrial capital and efficiency. Change industrial structure can narrow the income gap by promoting the labor from the industry of low labor productivity to the industry of high labor productivity, but this study found that the influence of the upgrade of the industrial structure on income gap has comparison U characteristics, and at the beginning of the industrial structure upgrade, the upgrade of industrial structure will expand the income gap, when the industrial structure upgrade after reaching a certain degree, the income gap will narrow with the upgrading of industrial structure. But the financial repression will hinder the upgrade of industry structure, as a result,the upgrade of industrial structure has been lagged, and long-term stayed in the primary stage, which result in a widening income gap.At the same time, this paper choose a panel data that rang from1980to2008and28provinces to make empirical analysis, the results show that financial depression effect on the income gap is smaller, the upgrade of industrial structure in our country is still in primary stage, so the income gap expand with the upgrading of industrial structure, urbanization can reduce income gap, the government intervention in the economy can also help to narrow the income gap. At the end of the paper, from the aspect of the upgrading of industrial structure, and the improvement of urbanization and so on, we provide some policy suggestions on narrowing the income gap in China.