The Influence Of The Transfer Payments On Income Inequality

With the rapid development of economy in our country,the distribution gap of residents'incomes is widening.It not only causes many social contradictions but also has a negative effect on deepening the reform and building a harmonious society in China.Narrowing the income distribution gap and realizing the fair redistribution have become an important goal of macroeconomic policy,as well as the focus of attention in economics academic.As one method of government redistribution,the political goal of the transfer payments is to reduce poverty and to protect the interests of low-income groups,at the same time to reduce the inequality of income distribution that the market can't avoid.With the implementation of urban and rural medical reform,minimum guarantee allowances and various social security policy,the government transfer payments have increased rapidly,which directly leads to the increasing of urban and rural residents' transfer incomes.Whether the residents' transfer income plays a function of regulating the redistribution or not,and eases the phenomenon of income inequality or not in our country,become the main content of my research.At first the article reviews the domestic and foreign literature about the progress of research on transfer payments adjusting income inequality,and points out the disadvantages of the existing researches which are studied from the perspective far from systemic and integrity.So the research idea of this article is to choose the method that combines population grouping decomposition with factor decomposition of the child components from the perspective of residents' transfer incomes.From the perspective of domain decomposition and revenue source,it uses 2005-2013 provincial panel data to estimate the impact of the transfer payments on residents' income inequality.From the perspective of domain decomposition,it uses GE index and its decomposition method to determine transfer income is increasing or reducing income inequality in China,by comparing the metastatic index size of our nation-wide,within-urban,within-rural and rural-urban areas which contains transfer incomes with one which does not.From the perspective of revenue sources,it uses variance analysis to calculate the contribution of transfer income to income inequality.The result shows that as an instrument of government policy to adjust income distribution,transfer income only relieves the income inequality of within-urban.On the contrary,it increases the income inequality of the nation-wide,within-rural and rural between urban.And furthermore,transfer income gap has contributed 25.45%to national income inequality,which becomes the second biggest contribution factor to income inequality up to now.So we draw that at this time transfer income plays a reverse function of regulating the income distribution.The main reasons of adverse transfer phenomenon are unfair redistribution system,unreasonable transfer payment structure and scarcity of transfer payment.