Research On The Relationship Between FDI And Income Inequality In China

Since the reform and opening up in 1978,China's economy has made the world's attention,the overall income level of residents has increased significantly.But can not be ignored is that China's income inequality between the residents began to appear,the income gap gradually into the perspective of China's economic research.On the factors that led to the rise of China's income inequality,the previous research has been rich results,from the urban-rural income gap analysis,from the perspective of economic restructuring,as well as from the perspective of foreign trade research.Foreign direct investment has been playing an important role in China's economic growth since the reform and opening up.As a foreign capital to participate in the production of social production in China,it plays an important role in China's economic growth.At the same time,the profitability of capital,FDI is inevitable to China's industrial structure,regional development,Institutional changes and human capital and other aspects of a wide range of profound impact,as China's income gap changes an important factor.This paper starts from the perspective of foreign direct investment,and analyzes the dynamic process of the impact of foreign direct investment on China's income gap with the change of human capital threshold.This paper mainly discusses the influence of foreign direct investment on China's income gap from the theoretical and empirical aspects,among which the key variables are human capital.Theoretically through the construction of a dual structure of the economy of modern departments and traditional departments,in which the modern sector has a high productivity,and foreign investment into the main sector.Enter the modern sector must meet the minimum human capital threshold,the traditional sector individual can reduce the consumption of human capital to increase the minimum human capital threshold.The effect of maximizing the human capital threshold and the effect of FDI on income inequality is deduced based on the objective of maximizing the utility of the individual under consumption and investment constraints.The empirical model uses the provincial panel data of China in 1997 and 2010 to carry out the unit root test of the data,and constructs the threshold regression model with the human capital as the threshold variable.The threshold effect of the FDI on the inequality of income in China is tested.The results show that FDI There is a significant threshold effect on income inequality.Finally,this paper argues that the introduction of FDI can reduce the degree of income inequality.In order to effectively play the role of introducing foreign capital,the current work of the government is focused on improving the level of labor education and promoting the development of the tertiary industry.It is necessary to strengthen the domestic investment and to speed up the process of urbanization in China,taking into account the fairness and efficiency.It is in line with the requirements of social fairness and justice,while promoting economic development and reducing the inequality of social income.