Management World,No. 05
【Abstract】 The household saving rate in China is consistently high and maintains an upward trend. Meanwhile, the housing prices rise quickly as well. Saving for housing is an important motive for the rising saving rate. Taking the 2011 pilot real estate tax reform as a natural experiment, this paper employed the difference-in-difference (DID) method to first evaluate the impact of the real estate tax on the prices of different types of housing and then evaluate the impact of housing prices on the household saving rates of the cities where the aforementioned reform has been carried out. The results showed that real estate tax had a structural effect on the housing market. Due to the different tax exemption policies on different types of housing in this reform, the price of large housing went down, while the price of small housing went up. This structural effect has differential impacts on different income groups’ saving behavior. To be specific, the low income group’s saving rate experienced a 0.9 percentage point increase. Furthermore, this increase in the saving rate among the low income group is achieved by reducing the expenditure on clothing, transportation and communication. Therefore, this study not only verifies the contribution of the housing market to the high saving rate in China, but also discovers the income distribution effect brought about by the real estate tax reform.
Impact of human capital composition, relative wage and international migration on income distribution
Journal of International Trade,No. 09
【Abstract】 As an important part of economic globalization, the influence of international migration on income inequality is examined by growing literature. This paper first builds an overlapping generation model to examine how the international migration of skilled workers influences the income distribution of host countries in the context of endogenous human capital. The results show the immigration of skilled workers not only affects the income disparity between native skilled workers and unskilled workers in host countries, which is termed “relative income effect” on human capital, but also affects the relative proportion of native skilled workers and unskilled workers in host countries, which is called “composition effect” on human capital. Therefore, the relationship between international immigration and income inequality in host countries is determined by the net effect of “relative income effect” combined with “composition effect.” Based on OECD's data from 2000 to 2011, this paper employs the dynamic panel data model to carry out system GMM estimation of the impact of immigration on income inequality in host countries. The empirical results suggest that in the short run, foreign immigration can serve to reduce the income inequality in host countries; however, in the long run, foreign immigration can increase income inequality in host countries.
Management World,No. 11
【Abstract】 This paper discusses income distribution effect of financial funds at village level, and reveals the influencing mechanism of financial funds on village income gap, hence complements the distribution process of financial funds from central to local, then to villages and peasant households. From practice, in the vertical distribution of financial funds from towns to villages, then to peasant households, it is prone to be obtained by rich villages and peasant households with high incomes, which expands income gap level among and within villages. And further evidence shows, the pro-productive payment preference of local governments leads to the excessively high ratio of capital constructive payment, and this kind of payment has more income elasticity on high income peasant households, making financial funds more beneficial to high income peasant households. Seen comprehensively, biased capital allocation party and pro-productive fund use direction make China’s rural finance with significant rural income gap expansion effect.
Finance & Trade Economics,No. 08
【Abstract】 This paper reviews the issue of national income distribution, and points out that Yang Jianbai has made great contribution in national income statistics and theoretical research. Primary distribution of national income should manage the relationships of employees and enterprises, enterprises and the nation. In the aspect of redistribution, classic papers regarding the distribution of social products are still exerting great significance on the study of national income distribution and redistribution. Finally, this paper introduces the origin, calculation method and governance of excessive distribution of national income.
Lewis turning point, national income distribution structure and economic rebalancing in and outside China
Finance & Trade Economics,No. 10
【Abstract】 The paper estimates the rural surplus labor by using the standard structural method, and on the basis, is aimed at explaining the reasons for China’s internal and external economic imbalances from the perspective of development stages of dual economy. The findings show that before the Lewis turning point, unlimited supply of labor constrained wage increase, leading to biased distribution of national income towards enterprises and governments; after the Lewis turning point, remuneration for labor accounts for more in national income, the consumption potential of the household sector expanded, and the national savings rate showed an inverted U-shape along with different dual economic stages. Meanwhile, the fund flow statements show that in the stage of social redistribution, the net social insurance welfare for the household sector was negative, indicating that fiscal transfer payment was reversely adjusted, which restrained the current consumption power of the household sector. Therefore, on the one hand, China should break the segmentation of labor market, and address the tension of dual economy; on the other hand, it need also adjust the structure of government spending and steadily increase the labor income in order to release the potential of domestic consumption.
The Kuznets’ inverted-U curve of income distribution: a cross-sectional and panel data re-verification
China Industrial Economics,No. 04
【Abstract】 It is a continuing debate in academia over how an economic entity’s income distribution evolves in the modernization process. This paper first makes a theoretical explanation on the Kuznets’ inverted-U curve of income distribution from the viewpoint of dual-structural transformation and institutional change in the modernization process. There have been continuing contradictory empirical results on the Kuznets’ inverted-U curve of income distribution since Ahluwalia’s initiation using cross-country data to regress inverted-U curve 40 years ago. Against this background, this paper conducts a re-verification by using cross-sectional and panel data covering 149 countries and regions from 1981 to 2013 in the World Bank’s World Development Indicators (WDI) database and various estimation methods including pooled regression, fixed effect, difference GMM and system GMM. The empirical results indicate that the newest data and methods support the inverted-U curve once again. The Kuznets’ inverted-U curve of income distribution is a general tendency in the modernization process of human society. On this basis, this paper analyzes the practice of the inverted-U curve in China and finds that China has entered the Kuznets’ inflexion area since 2011, and its income disparity will maintain stable for a period. Provided quickening structural readjustment and system improvement, China’s income disparity will decline gradually.
Effects of imperfect competition on income distribution: from the perspective of product-labor joint market structure
China Industrial Economics,No. 01
【Abstract】 The gap between real compensation and labor productivity has become a prominent issue of China’s income distribution. The literature documents that the capital-biased distribution of power within firms determines a low labor share of income. In contrast, starting from the imperfectly competitive market structure outside enterprises, this paper provides a new explanation on the compensation-productivity gap. From the joint market perspective, findings are as follows. In most Chinese industries, product market is imperfectly competitive, and labor market can be characterized by bargaining and here employers are dominant. In this joint market structure, imperfect competition of product market generates monopoly rent. Because workers’ bargaining power is weak, most of the monopoly rent is captured by enterprises, which induces a low labor share of income. These findings demonstrate that market power of enterprises in both product and labor markets distorts the relationship between labor compensation and contribution, and leads to lower labor share of income. Therefore, competition promotion on the joint product-input market is the key to improving the income distribution mechanism.
China Rural Survey,No. 06
【Abstract】 In 2006, the China Banking Regulatory Commission (CBRC) issued a document to ease the entry threshold for rural financial institutions in several ways. This paper analyzes the impact of this policy on income distribution in rural areas in an empirical way. The study finds that the relaxation of entry threshold has promoted financial inclusion in rural areas, effectively enhanced the income level of middle and low-income groups, and significantly reduced income inequality in rural areas. On this basis, the paper further analyzes the influence paths and finds that the relaxation of market entry threshold has affected rural income distribution mainly through the following channels, namely, rural residents’ employment, occupational choice (by the way of increasing self-employment) and the transfer of land management rights.
China Industrial Economics,No. 12
【Abstract】 The reform of replacing business tax with VAT is an important change of China’s tax system, which has great impact on tax burden, welfare and income distribution of Chinese households. This paper embedded the VAT deduction mechanism into the input-output price model, and used the CFPS data and China input-output table of 2012 to analyze the price effect and income distribution effect of the reform of replacing business tax with VAT. The results show that in the context of maintaining the existing tax collection and administration ability of China, the reform of replacing business tax with VAT may generally make the price decline and reduce the tax burden on enterprises. If the tax collection and administration ability has increased to 100%, there are some labor-intensive sectors whose price and cost could rise highly, such as transportation, postal service and education. After the reform of replacing business tax with VAT, the tax burden and its rate of households in cities and towns both decline. In the baseline scenario that the current tax collection and administration ability remains, the reform of replacing business tax with VAT has slightly improved the status of income distribution from the perspective of MT index. However, once the tax collection and administration ability has been greatly improved, due to the strong regressive nature of VAT, it is possible to increase the tax burden of residents and worsen the situation of income distribution.
Regional income mobility of urban households, tax burden, and dynamic equilibrium of income distribution
Journal of Finance and Economics,Vol 43,No. 08
【Abstract】 Based on the permanent income hypothesis and Galton income mean model, this paper summarizes the mechanism of the effect of tax on income mobility. Then, it analyzes the linkage between multi-dimensional income mobility and tax policy using the systematic dynamic panel GMM model and panel ordinal Logistic regression. It arrives at the following conclusions: Firstly, tax burden is one of the key factors affecting absolute and relative income mobility of urban residents; the effect is mostly determined by household population structure in various regions; the reduction in tax burden increases absolute regional income mobility and reduces the probability of ranking moving upward when regional average family employed members are less than two, which is the opposite of results when regional average household employed members are equal to or more than two. Secondly, for provinces with relatively high proportion of deduction standard of individual income tax in household monthly per capita income, their absolute income mobility and probability of income ranking moving upward are less than other provinces. Thirdly, the reform of individual income tax has the significantly positive effect on the increase in absolute income mobility each year. In addition, effects of factors such as years of education, structure of income sources, industrial structure, and the degree of urbanization on income mobility present characteristics of stage and regional heterogeneity. It means that the tax system arrangement should pay more attention to household and regional characteristics, focus on horizontal and vertical equity tax principles, promote the flow of residents’ income across regions, lower income solidification degree, and realize the dynamic equilibrium of income distribution.