Analysis On The Influence Of Income Distribution Gap In China Across The Middle-income Trap

The income per capita of China is $1000 in 2001,which means that China became one of the members of middle-income countries. And in 2010, China became a member of upper-middle-income countries.In the face of widening income gap and economic new normal,the speed of China’s economic growth slows down.There is a great possibility to drop into the middle-income trap.By observing the experience of different countries,we find that narrowing the income gap is vital to pass through the middle-income trap.This paper focuses on the relationship of income gap and middle-income trap. It emphases on the following issues: 1. the concepts of middle-income trap and income trap;2.summarize the relationship between the income gap and middle-income trap through literature;3.compare the income gap of China with South Korea and Argentina;4.compare the empirical analysis results of the relationship of income gap and economic growth between China and South Korea and Argentina;5.learn experience of narrowing income gap by comparing the income distribution of developed and developing countries.In order to reach that objective, this paper uses different methods including history and logic analysis method, synthesis method and analysis method, comparative analysis method and econometric methods.The main conclusions are as follows:South Korea’s income gap is positively related to the GDP growth rate, while the income gap is negatively related to the GDP growth rate of Argentina.Compared to South Korea, the income gap of Argentina has a larger negative effect on per capita GDP.China’s income disparity in the middle-income stage to some degree looks like Argentina for the income gap of China is negatively related to the GDP growth rate.Due to the empirical analysis does not consider the reform dividend in China, so we can only draw the conclusion that China has a possibility to fall into the middle-income trap.This paper may have innovations as follows:This paper attempts to discuss the relationship between the income distribution and middle-income trap during the stage of middle–income. This paper makes an econometric proof of the relationship between income distribution and middle income trap,meanwhile,compares three different empirical analysis results of China and South Korea and Argentina then discovers that China has a great possibility to fall into the middle-income trap.