| Domestic literature and foreign literature on the impact of government spending on the income gap exist controversy.Foreign scholars generally believe that fiscal policy is one of the main factors that affect the income gap.The government provides public goods and public services through the public finance,which is the government's leading income distribution behavior,and has the function of improving the income gap.But it is a serious challenge to the domestic research and the reality.This paper employs a world panel data regression model to investigate whether government expenditure increases or reduces income inequality.The data consists of Gini coefficients,corruption perceptions indexes and macro economic indicators covering 129 countries over the period from 1970 to 2006.We categorize the full sample into 3 subsamples according to time series averages of corruption perceptions indexes,such that the number of valid observations for all subsamples are approximately equal.This paper presents evidence that the coefficient in a regression of Gini coefficient on government consumption is negative and significant for the low-corruption sample,negative and less significant for the middle-corruption sample,and positive for the high-corruption sample.Corruption affects the income gap by changing the policy effect of the government expenditure.The more serious the corruption is,the less the effect of the government expenditure to improve the income gap is.A U-shaped relationship between income inequality and per capita income is found for the low-corruption sample.The full sample,the middle-corruption sample and the high-corruption sample provide evidence in support of the Kuznets hypothesis.The empirical results show that corruption,manufacturing industry added value and the income gap into negative correlation and other industry added value(deep financial and services),the GDP deflator as positively correlated with the income gap. |
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