Capitalization of Productive Factors and Income Distribution Problems - Unraveling the Cruxof China＇s Income

• Published in: 中国经济学人：英文版 no. 5; pp. 16 - 30
• Main Author: 张车伟 程杰
• Format: Journal Article
• Language: English
• Published: 2013
• Subjects: 中国; 再分配; 分配问题; 发达国家; 收入分配; 收入差距; 生产要素; 资本化
• ISSN: 1673-8837

When observing China＇s income distribution problems .from an international perspective, we find that China＇s income inequality is not much different from developed countries after primary distribution. The real difference between China and developed countries is that income inequality in developed countries will reduce greatly after income redistribution while the income inequality remains the same for China. Therefore, one can conclude that income inequality in China derives from the ineffectiveness of redistribution. However, a large income gap is not the main reason for skewed income distribution in China. In fact, the problem lies in unfair distribution resulting from factor capitalization. A handful of people have taken proceeds from public assets at the expense of all the people, which has led to social poIarization. To remove unfair distribution, China should improve its means of redistribution to narrow its income gap in order to develop a fair and reasonable pattern of income distribution.