The Cause And Economic Effect Analysis Of Chinese Income Gap Between Industries

Since the reform and opening up, China’s distribution of income has undergone enormouschanges. What’s more, the gap of the income has been a topic of the public. The gap of theincome is mainly manifested in the gap between urban and rural income and the wage gap ofindustry. Which, on the issue of urban-rural income gap and the income gap between theseareas, the theory has been more in-depth discussion.However, they research less on the issue ofthe gap of the industry wage.In this paper, drawing on the basis of domestic and foreign literature, the integrated use ofa combination of qualitative and quantitative analysis, static and dynamic analysis, to describethe income gap after China’s reform and opening up. What’s more, using the extreme ratio ofthe inter-industry wage differentials and the standard deviation and the quartile deviation andthe Gini coefficient to measure the income gap and analyze the trends of the change andreach the conclusion that the income gap in China is large. Secondly, conduct a empiricalanalysis to the income gap and find that the main factors of the income gap are monopoly andthe human capital and labor productivity levels and the level of opening. Through the data of1985-2011, we can establish an autoregression model, to research the growing effects of theincome gap. The results show that the expansion of the industry wage gap in the short term tostimulate economic growth, but in the long run, the growing income gap will slow down theeconomic development. Finally, this paper raise suggestions to close the income gap from theaspects of monopoly and the human capital and labor productivity levels and the level ofopening, which helps to stimulate economic growth.In a word, researching the income gap can help us realize and deal with many problems,which will help us to develop a harmonious society.