Effects of Social Security Spending on Income Distribution and Poverty Reduction in China

Reasonable income distribution and eradication of rural poverty are vital for building a moderately prosperous society in all respects in China.This paper primarily examines the income distribution and poverty reduction effects of social security spending.Market income and redistribution policies are two determinants of income gaps.Based on CHIP2018 household survey data,we find that inadequate income redistribution policies have contributed to yawning income gaps,and that social security spending is more redistributive than personal income tax and social security contributions.After estimating the redistribution effects of social security spending and itemized incomes,we find that pension payments have contributed the most to household income gaps,and that subsistence protection and rural pension payments help improve income distribution.With respect to the poverty reduction effects of social security spending,we have estimated China’s current poverty incidence and the poverty reduction effects of pension payments,healthcare,and educational allowances with CHIP2018 data,and discover that an increase in social security spending may effectively reduce rural poverty.In building a moderately prosperous society in all respects,China should increase social security spending,focusing on specific target groups,and promote the role of social security spending in regulating income distribution and offering social protection to rural residents.

Wage and Income Distribution in China:Review and Outlook

Under the planned economy,China’s distribution relations were relations among the state,state-run enterprises,employees and the collective economy;relations between heavy industry and light industry;and relations between cities and the countryside.After China’s transition to a market-oriented economy,the distribution relations among the state,state-run enterprises and employees evolved into distribution relations between the government,enterprises and households;the distribution relations between heavy industry and light industry evolved into distribution relations between the state sector and the private sector;and the distribution relations between cities and the countryside evolved into distribution relations between original urban dwellers and migrant populations.Wage system reform was carried out throughout the transition of these three types of distribution relations.Income distribution contradictions in China,which are a problem left over from history and intrinsic to the market-based economy,eased over the years.Some people and regions achieved prosperity,and urban-rural and interregional income gaps narrowed.However,widening household income gaps pose barriers to China’s economic sustainability and vision of building a moderately prosperous society in all respects.Mechanisms to promote common prosperity are incomplete and inadequate.The disequilibrium of functional distribution is an important cause of these income inequalities.The overall wage level of ordinary workers is low.In the future,China'should give full play to the decisive role of the market in primary distribution to ensure proper return to all types of factors,and enhance redistribution to achieve common prosperity for all its people.

Modelling of Wage and Income Distributions Using the Method of L-Moments

Commonly used statistical procedure to describe the observed statistical sets is to use their conventional moments or cumulants. When choosing an appropriate parametric distribution for the data set is typically that parameters of a parametric distribution are estimated using the moment method of creating a system of equations in which the sample conventional moments lay in the equality of the corresponding moments of the theoretical distribution. However, the moment method of parameter estimation is not always convenient, especially for small samples. An alternative approach is based on the use of other characteristics, which the author calls L-moments. L-moments are analogous to conventional moments, but they are based on linear combinations of order statistics, i.e., L-statistics. Using L-moments is theoretically preferable to the conventional moments and consists in the fact that L-moments characterize a wider range of distribution. When estimating from sample L-moments, L-moments are more robust to the presence of outliers in the data. Experience also shows that, compared to conventional moments, L-moments are less prone to bias of estimation. Parameter estimates obtained using L-moments are mainly in the case of small samples often even more accurate than estimates of parameters made by maximum likelihood method. Using the method of L-moments in the case of small data sets from the meteorology is primarily known in statistical literature. This paper deals with the use of L-moments in the case for large data sets of income distribution （individual data） and wage distribution （data are ordered to form of interval frequency distribution of extreme open intervals）. This paper also presents a comparison of the accuracy of the method of L-moments with an accuracy of other methods of point estimation of parameters of parametric probability distribution in the case of large data sets of individual data and data ordered to form of interval frequency distribution.

The Empirical Analysis of the Impacts of Income Distribution Gap on Consumption Demand:Based on the Statistic Data of Chinese Urban Residents in 2000-2010

This paper analyzes the impact of income distribution gap on consumption demand from a theoretical view,and draws the conclusion that there is an inverse relationship between income distribution gap and consumption demand.Then,the paper finds that the existing widening income distribution gap in China has a negative impact on consumption demand,but this is not the key factor for the insufficient consumption demand because of the low level of per capital income.At last,it suggests that governments should improve the income level of entire residents and adjust income distribution structure simultaneously.

China＇s Current income Distribution Status and Countermeasures Analysis

From two perspectives, - the proportion of residential income and the equality of residential income distribution - this paper identifies a widening gap in China＇s income distribution and considers that this is a result of different factors such as technological progress, increasing return on assets, the economic growth priority strategy of local governments, the increasing number of migrant workers who are in a weak position to negotiate wages, as well as the rapid process of industrialization. Based on the above analysis, this paper presents policy recommendations on how to improve the income distribution system.

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

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.

On the Reasons and Strategies about the Expansion of Present China＇s Income Distribution Gap

In recent years, the disparity of Chinese people＇s income has been unsteadily expanding. The reasons lie in many aspects, among which there are mainly income disparity between the rural and the urban and the disparity between regions, including the disparity between people both in the city and in the countryside. Therefore the corresponding strategies should be put into effect .

China＇s National Income Distribution in the New Normal：Characteristics,Contradictions and Reforms

This paper discusses the evolution and characteristics of China's national income distribution structure after the dawn of the new century and particularly in China's new normal of social and economic development. This paper casts light on the profound national income distribution and redistribution effects of changing ownership and economic reforms, as well as the microscopic household income distribution effects of changes in macroscopic distribution structure. Based on an analysis of changes in macroscopic distribution pattern, this paper explains the structural contradictions of national income distribution in China and their effects on China's economy, providing a theoretical analysis of income distribution for deepening supply-side structural reform.

Financial Coordination and Income Distribution of Agricultural Supply Chain

The agriculture field is a fundamental industry which supports the rapid development of the nation?s economy.However,credit constraints faced by farmers have restricted the modernization in the agricultural industry.The agricultural supply chain finance is effective in promoting rural industrial revitalization and agricultural modernization,which is of great significance to the transformation and development of rural economy and agriculture in China.In this paper,the financial coordination model in agricultural supply chain is constructed,and the income distribution model of Shapley value method is introduced.The results showed that the agricultural supply chain finance can significantly improve the income of the participants in the agricultural industrial chain and verify the economic feasibility of agricultural supply chain finance.

Technical Change,Income Distribution,and Profitability:Marx's Law Revisited

Under the assumption of constant real wage,Okishio’s theorem shows that profit rates do not fall after any viable technical change.Research has indicated that if real wages rise after the introduction of technical change and then profit rates fall,then such fall in profit rates belongs to the realm of profit squeeze theory,which leads to the claim of the impossibility of a consistent theory of declining profit rate based on Marx’s insight.The present study proposes a two-channel framework to distinguish the mechanism of rising organic composition of capital from that of profit squeeze,and show that any viable capital-using and labor-saving technical change would lower the profit rate if the wage/profit ratio is unaffected in a multi-sector setting.

Rural-urban Migration and Dynamics of Income Distribution in China:A Non-parametric Approach

Extending the income dynamics approach in Quah （2003）, the present paper studies the enlarging income inequality in China over the past three decades from the viewpoint of rural-urban migration and economic transition. We establish non-parametric estimations of rural and urban income distribution functions in China, and aggregate a population- weighted, nationwide income distribution function taking into account rural-urban differences in technological progress and price indexes. We calculate 12 inequality indexes through non-parametric estimation to overcome the biases in existingparametric estimation and, therefore, provide more accurate measurement of income inequalitY. Policy implications have been drawn based on our research.

Village Elections,Accountability and Income Distribution in Rural China

China has experimented with village elections for nearly 20 years. Using village and household survey data collected from 48 villages of 8 Chinese provinces for the period 1986-2002, this paper studies how the introduction of elections affects village governance and income distribution in Chinese villages. The econometric analysis finds the following outcomes. First, village elections have increased the share of public expenditure and reduced the share of administrative expenditure in the village budget, so the accountability of the elected village committee has been enhanced. Second, elections have not led to more income redistribution; instead, they have reduced the progressiveness of income redistribution. Third, elections have reduced income inequality measured by the Gini coefficient in villages. The reduction is equivalent to 5.7 percent of the sample average, or 32 percent of the growth of the Gini coefficient in the period of 1987-2002. Because village elections have not led to more income redistribution, this positive effect must have come from more public investment, which benefits the poor more than wealthier people. The general conclusion that we draw from our results is that, despite institutional constraints, village elections have improved village governance and the life of villagers.

Development strategy,economic transformation and income distribution

Income inequality will affect China’s economic growth over the long term.It is also one of the important factors determining whether China can avoid the middle-income trap.Different from the‘equality of outcome’perspective,this paper analyses the causes of China’s income distribution from the perspective of equality of opportunity.The inequality of opportunity in China is mainly caused by distorted institutional arrangements in the financial markets,labour markets,and product markets,involving e.g.restrictions on interest rates,the household registration(hukou)system,price controls on industrial and agricultural products,and privileges of state-owned enterprises.All of these distorted institutional arrangements are attributed to the heavy-industry-oriented development strategy in the recent history.Although this strategy was gradually abandoned,it has generated some institutions which have long-run impacts on the income distribution in China.Transforming government functions through institutional reforms is necessary to improve equality of opportunity and income distribution.

Modeling Impact of Hurricane Damages on Income Distribution in the Coastal U.S.

This article examines the impact of catastrophic hurricane events on income distribution in hurricane states in the United States. Media claims have been made and the perception created that the most damaging impact of hurricanes is on the lowest income population in the affected states. If these claims are true, they may have serious implications for the insurance industry and government policy makers. We develop a panel data, fixed effects econometric model that includes hurricane-impacted states as cross-sections using annual data for a period of almost 100 years. The Gini coefficient is used as a measure of income inequality, and is a function of normalized hurricane economic damages, gross domestic product(GDP), a set of socioeconomic variables that serves as a control, time trend, and cross-sectional dummy variables.Findings indicate that for every 100 billion US dollars in hurricane economic damages there is an increase in income inequality by 5.4 % as measured by Gini coefficient.Political, sociodemographic, and economic variables are also significant. These include such variables as the political party controlling the U.S. Senate, the proportion of nonwhite population by state, and GDP. Time trend is a positive and significant variable, suggesting an increase in income inequality over time. There are significant differences among the states included in the study. Our results demonstrate that different segments of the population are differently impacted by hurricanes and suggest how that differential impact could be considered in future government policies and business decisions, particularly those made by the insurance industry.

Correlation between Employment and Income Distribution in China

The employment and income distribution problems after reform and opening up have become more and more lasting. To get these problems clear is of great practical significance in acquiring a deeper understanding of the nature, characteristics, and root causes of the current income distribution and employment problems; and finding a solution is to contribute to the building of a harmonious society. The co-existence of a half-market and half-traditional system is the basic feature of employment and income distribution in China. This paper analyzes the general and structural correlations between income distribution and employment in China. In the analysis of structural correlation, the paper explains the multi-institutional segmentation in the transitional period. In the multi-level areas segmented institutionally, the wage income gap or labor income gap has become the main factor contributing to the general income gap. To narrow the income gap, it is therefore necessary to attach much importance to the reform of employment-related institutions, the establishment, and the improvement of the market economic order.

Fiscal Expenditure,Trade Openness and Income Distribution

As a policy tool of income redistribution,fiscal expenditure cannot change the unfair primary distribution caused by trade openness.Moreover,the effect of trade openness on the scale of fiscal expenditure distorts its income redistribution effect.This paper’s empirical analysis shows as follows.(1)Both fiscal expenditure and trade openness expand income gap on the whole.(2)Whatever budget structure and expenditure category,fiscal expenditure cannot affect the scale of trade openness significantly,which means that fiscal expenditure cannot indirectly affect trade openness’income distribution effect through its scale.(3)Trade openness can reduce the scale of public finance expenditure and most categories’fiscal expenditure,which means that trade openness can indirectly affect fiscal expenditure’s income redistribution effect through its scale.Therefore,trade openness will limit and distort fiscal expenditure’s income redistribution effect.While improving the income distribution effect of fiscal expenditure,we should also recognize that this effect is limited.

The Approaches to Narrowing Urban-Rural Income Gap——From the Perspective of Rural Social Security

From the situations about the incomes and life quality of the urban and rural residents,the thesis briefly introduces the status quo of the urban-rural income gap and explores the impact of the income gap on social economy:firstly,it hampers economic development;secondly,it is detrimental to the social development.Then the thesis analyzes the role of a sound social security in narrowing urban-rural income gap:at first,it broadens the institutional environment of improving the agricultural efficiency;secondly,it eliminates the uncertainties influencing the farmers' income;thirdly,it improves the farmers' capacity to increase income;at last,it enhances the farmers' consciousness of wealth.Next the thesis inquires into the problems existing in the system of rural social security:the first problem is more obviously fragmented system;the second is inadequate security projects and narrower coverage;the third is an obvious lack of equality in urban and rural security;the fourth is even less sound management system;the last is the lagging of legislation.Afterwards the thesis proposes the countermeasures and suggestions to improve the system of rural social security and narrow urban-rural income gap:firstly,to integrate the social security system in rural areas;secondly,to perfect security projects and enhance the security system;thirdly,to integrate the administrative management of social security;at last,to enforce the legal system.

Analysis on the Reform and Improvement of Institutions Retiree Income System

Norms of the institution retiree subsidies are important measures to protect and improve people's livelihood, as well as maintain the stability of the retiree group. The income of institution retiree was studied by analyzing its policies and implementations, also some problems were pointed out such as lacking of subsidy standards,no convergence with the historical data,and the existence of special subsidies. Hence,in order to make a smooth transition and improve the pension insurance system of institution, implementing differentiating subsidies and establishing multi-pillar pension insurance system were proposed to solve the problems above.

Scrutinizing Distributions Proves That IQ Is Inherited and Explains the Fat Tail

The motivation of this paper is to show how to use the information from given distributions and to fit distributions in order to confirm models. Our examples are especially for disciplines slightly away from mathematics. One minor result is that standard deviation and mean are at most a more or less good approximation to determine the best Gaussian fit. In our first example we scrutinize the distribution of the intelligence quotient (IQ). Because it is an almost perfect Gaussian distribution and correlated to the parents’ IQ, we conclude with mathematical arguments that IQ is inherited only which is assumed by mainstream psychologists. Our second example is income distributions. The number of rich people is much higher than any Gaussian distribution would allow. We present a new distribution consisting of a Gaussian plus a modified exponential distribution. It fits the fat tail perfectly. It is also suitable to explain the old problem of fat tails in stock returns.