The Impact Of Education On China’s Industrial Income Distribution

With the rapid development of the world economy,China’s economy development is also impressive since the reform and opening-up policy. People’s living standards have greatly improved, yet the income gap between industries is expanded, which will hinder the economic development. At present, China’s economy is in the process of transition, the increasing income gap may generate new social contradictions which conflicts with the goal of building a harmonious socialist society. Therefore, the theory of income-gap between industries aroused great attention. The breakthrough point of this article is the relationship between income level and the human capital level. Then the further study focuses on the relationship between education level and the industry revenues, and the influence of income inequality.First, this paper analyzes the effect mechanism of education on income based on theories. The mechanism of education on labor income in three ways: human capital externalities, configuration effects. Secondly, empirical analysis of education effect. Granger test found that the introduction of variable education, the explanatory power of regression equation has been significantly improved. The result of log-linear model shows that education has a positive correlation with income. By panel data regression analysis, the return rate of education is 32.74%. On the basis of theoretical and empirical analysis, this paper proposes that China should promote balanced development of compulsory education, improve the traning of labor and create a favorable institutional environment for narrowing the income gap.