By Li Jianwei, Research Team on “China’s Income Distribution System Reform”, Institute of Public Administration and Human Resources, DRC

Research report, Special Issue No.3, 2018 (Total 1570) 2018-3-28

Abstract: Determined by residents’ normally distributed IQ, their human capital and income definitely fall into normal distributions. Optimizing the allocation of educational resources could help improve the level of social human capital and income, whereas that may widen the gap of residents’ income and even make resources mismatched and wasted when educational resources are overly adjusted. In the process of industrialization, the gap of residents’ human capital and income will present an inverted U curve with a development trend from rise to decline and ultimately return to an appropriate level in line with the distribution gap of their IQ. The gap of residents’ human capital and income will lead to an exponential increment of the absolute margin between their property and property income in the later stage of development. Coupled with the intergenerational transfer effect of the rich and poor spawned by bequest assets, the polarization induced by their property and income will become increasingly sever in the later stage of development. In this regard, transfer payment is a significant approach to narrowing the gap of residents’ income and property. At present, the gap of property between Chinese residents has continued to become widened, making the polarization of people’s income quite prominent. Therefore, the authorities should focus on containing the widening gap between residents’ property and property income and reducing the margin caused by the intergenerational transfer of property and property income.

Key words: the distribution of residents’ income, income gap, evolution law, the distribution of residents’ IQ