Institutional Quality,Economic Growth And Income GAP

At present,the main contradiction of our society has been transformed into the contradiction between the people's growing demand for a better life with the imbalanced and insufficient development.However,the continuous improvement of China's economic growth strength,increasing per capita wealth,and growing national strength have proved that a series of reform policies implemented since 1978 have been effective.Under the background of the deterioration of the global economic situation and the "three-phase overlap",whether the policy of structural reform on the supply side,the reform of the tax system or the construction of cultural roads proposed in the report of the Nineteenth National Congress of China indicate that China is making institutional changes,but also looking for growth breakthroughs to adapt to the new normal economic development pattern.Based on this,this paper combines theoretical and empirical conclusions,in addition to in-depth and shallow modeling,uses the fixed effect estimation method to empirical study the transnational panel data of 55 countries or regions from 2000 to 2014,and combines with Chinese actual situation,provides practical policy recommendations for deepening institutional reform and narrowing the income gap in China.Firstly,this paper summarizes the relevant research background,research significance and ideas,as well as the possible innovation and shortcomings of this paper.By combing the literature at home and abroad,this paper finds that there are many studies on the relationship between institutional quality and economic growth or economic growth and income gap,but few papers have put them under the unified research framework.This paper draws a theoretical conclusion that the improvement of institutional quality can reduce income gap while promoting economic growth by referring to the two-sector intertemporal growth model.At the same time,referring to the relevant standards,this paper divides the system into three different institutions: legal institution,political institution and economic institution.In developed and developing countries,five representative countries are selected to explore the development status of different institution quality in each country.The research shows that there is still a big gap between the developing countries and the developed countries in terms of institution construction,and there are also differences in the impact of institution quality and economic growth on income gap in different countries.Secondly,on the basis of theoretical mechanism research,this paper constructs an econometric model and uses fixed-effect panel estimation method to regression analysis of transnational panel data of 55 countries.The conclusions as follows are: economic growth has a significant negative inhibition on income gap;there is a significant inverted U-shaped relationship between institution quality and income gap,which means,the improvement of institution quality although there is a negative inhibition on income gap.It helps to narrow the income gap,but the improvement of the quality of the institution will expand the income gap in the initial stage.With the improvement of the economic environment and the further improvement of the institution construction,the improvement of the quality of the institution will help to narrow the income gap.At the same time,different quality of the institution will have different effects on the income gap: the improvement of the quality of the political institution has no effect on the income gap.And there is a significant inverted U-shaped relationship between the quality of the economic institution and the quality of the legal institution with the income gap.At the same time,the quality of the legal institution strides the turning point earlier than the quality of the economic institution.In addition,this paper uses two sub-samples of developing and developed countries to study the heterogeneity,and draws the following conclusions: firstly,in both samples,economic growth is conducive to narrowing the income gap;secondly,in different samples,the impact of the quality of the overall institution on the income gap is different.There is a significant inverted U-shaped relationship between institutional quality and income gap in developed countries,but there is no significant correlation between them in developing countries.Finally,in developed countries,there is a significant inverted U-shaped relationship between economic institution and income gap,while in developed countries,the legal and political institutions have been relatively perfect and formed for a long time,and the possibility of short-term change is small.Therefore,the improvement of the quality of the two institutions can not significantly affect the income gap.In developing countries,there is a significant inverted U-shaped relationship between the quality of legal and political institutions and the income gap.Among them,the improvement of the quality of the initial political system has a far greater impact on the income gap than the quality of the legal system,but the improvement of the quality of the legal institution can move faster through the inflection point,which has a negative effect on the income gap.At the same time,due to the low quality of legal institution and political institution,the economic development of developing countries has not been effectively protected by policies and laws,so the improvement of the quality of economic institution has not had a significant impact on the income gap.However,in the whole sample regression results,only the improvement of the quality of political institution can narrow the income gap by promoting economic development,while the quality of other institutions can not significantly narrow the income gap through economic growth.Finally,according to the actual situation of our country,according to the relevant research conclusions and analysis of the problems,this article from the perspective of deepening the reform of our country and realizing the comprehensive institution construction,puts forward the corresponding countermeasures and measures system.This paper holds that narrowing the income gap and giving consideration to efficiency and fairness is always the core,and the key to improving the quality of Chinese institution lies on the improvement of the quality of legal institution and political institution,meanwhile,we also need to improve the quality of economic institution.To improve the quality of the legal institution,we should focus on improving the judicial institution and strengthening the protection of property rights.Firstly,while defining the main body of property rights protection,the government accelerates the quantification of property rights protection institution and forms a unified quantification standard system.Secondly,China needs to coordinate different administrative organs,division of labor and cooperation among various departments to improve the efficiency of property rights protection.The key to the quality of the economic institution lies in the implementation of reasonable tax policies,providing a sound business environment for the private economy,promoting the development of trade liberalization,financial liberalization and investment liberalization.To improve the quality of the political institution,we should focus on the intensification of anti-corruption efforts and the rationalization of government fiscal and taxation policies.Firstly,we should realize institution innovation,combine science and technology with anti-corruption,carry out clear government policies,improve the credibility of our government,and realize the real-time supervision of the broad masses of the people.Secondly,we should reduce taxes and fees,implement more active fiscal policies,increase investment in poverty alleviation and improve the coverage of social security.