Financial Development,Labor Income Share And Urban-rural Income Gap

At present,the issue of unbalanced underdevelopment has become increasingly prominent while the economy of our country is transformed from high-speed growth to high-quality development:the uneven distribution of urban and rural financial resources,the distortion of the ratio of labor and capital factors,and the inequality between urban and rural income.The uneven distribution of financial resources between urban and rural areas leads to the different level of urban and rural financial development.Income distribution of factors tilts to capital,resulting in a much lower share of labor income than most countries.in the world.The income gap between urban and rural areas has always been at a high level,which will inevitably lead to polarization between the rich and the poor and will not be conducive to the stable and harmonious social development.The income distribution effect of financial development has always been the focus of scholars’ study.Labor income,as a part of income,also has an impact on the income of urban and rural residents.Therefore,from the perspective of financial development,this paper explores the.role of income distribution in financial development by combining the relationship between the proportion of labor income and the income of urban and rural residents.Firstly,relevant literature studies on financial development,the proportion of labor income,and the income gap of residents were carried out,which are mainly divided into two aspects:the relationship between financial development and income disparity,and analysis of the influencing factors of labor income.Through studying and understanding the research of domestic and foreign scholars,we found that there are some shortages in related research.The relationship between financial development and household income distribution(ie,the distribution of scale income)has been fully studied,and the factors affecting the proportion of labor income have also been fully explained.However,ignoring the impact of financial development on the distribution of factor income(ie,functional income distribution)of labor,capital,and land and also ignoring the interlinkage between factor income distribution and household income distribution.Secondly,conduct theoretical analysis and status analysis,and study the mechanism of income distribution effect of financial development from both macroscopic and microscopic perspectives.Interpenetration between labor income and urban and rural income.Through statistical analysis,we can understand the changing trends and status quo of China’s financial development,the proportion of labor income,and the urban-rural income gap.Then,using the panel data of 31 provinces,autonomous regions and municipalities from 2000 to 2016,a fixed-effects model was established to study the impact of financial development(including scale and efficiency)and the proportion of labor income on the income gap between urban and rural areas.It is found that the expansion of financial development scale and the increase in the proportion of labor income will reduce the income gap between urban and rural areas,while the improvement in the efficiency of financial development will increase the income gap between urban and rural areas.By adding the interactive items of financial development and labor income to the model,it is found that the financial development efficiency and labor income accounted for the estimated value of the crossover items,and the direct impact of the labor income ratio on the urban-rural income gap is no longer significant.Therefore,we believe that the relationship between the proportion of labor income and the income gap between urban and rural areas is affected by the efficiency of financial development.Constructing a threshold panel model between the proportion of labor income and urban-rural income gap based on the threshold of financial development efficiency,and found that the proportion of labor income at different levels of financial development efficiency has a different effect on the urban-rural income gap.Then,according to the economic belt,the country is divided into East,Central and West.It is found that under different economic levels,the relationship between financial development,labor income share and urban-rural income gap is also different.The development of various aspects such as economic level and living conditions can be coordinated to achieve better results.Finally,according to the results of the study,relevant policy recommendations are proposed from the perspectives of promoting financial development,increasing the proportion of labor income,and narrowing the urban-rural income gap,hoping to improve Chinese financial system,strengthen the ability of financial services to the real economy,and increase the income of labor factors level,ease the income inequality of residents.