What Is an Output Gap?

The imbalance between China's urban and rural development has become an important factor restricting the balanced development of the economy and has attracted more and more attention from economists.

Urban-rural gap

Social Welfare

The income gap between urban and rural residents has further narrowed

The Rural Green Paper: Analysis and Forecast of China's Rural Economic Situation (2013-2014) released today by the Institute of Rural Development of the Chinese Academy of Social Sciences states that in 2013, the per capita net income of farmers continued to grow faster than the per capita disposable income of urban residents. The income gap between urban and rural residents has further narrowed.

The report pointed out that although the growth rate of farmers' income in 2013 was down from the previous year, the growth rate was still relatively fast, basically following the good situation since 2010. In 2013, the per capita net income of farmers was 8,986 yuan, an increase of 979 yuan over 2012, an actual increase of 9.3%. Among the per capita net income of farmers, the net income from family operations was 3793 yuan, an increase of 260 yuan from 2012, an increase of 7.4%; wage income surpassed the net income from family operations for the first time, per capita 4025 yuan, an increase of 578 yuan, an increase of 16.8%. The contribution rate of farmers 'wage income to the increase of farmers' per capita net income reached 59%. Among the per capita net income of farmers, the net income of family operations accounts for 42.6%, wage income accounts for 45.3%, property income accounts for 3.3%, and transfer income accounts for 8.8%.

At the same time, in 2013, the per capita living consumption expenditure of rural residents was 6,626 yuan, an increase of 718 yuan over 2012, an actual increase of 9.0%, and the gap between urban and rural consumption levels has further narrowed. The report points out that under the influence of the state's implementation of the underpinning policy, the consumption tendency of rural residents has remained stable.

Inescapable status quo-

While the income gap is widening, we are also facing the problem of widening the property gap.

Not long ago, a group of photos taken by a foreign photographer went viral online. The photos show the complex and diverse Beijing, ranging from high-rise buildings to run-down low-rise urban villages; from middle-class small flowers that play happily in children's playgrounds, to those who sell vegetables with their parents and go round Child ... Although this scene is not unique to Beijing and unique to China, it still shocks viewers and ponders-what is the current status of the gap between the rich and the poor in China?

Li Shi, a professor at the School of Economics and Business Administration of Beijing Normal University, said that for more than 30 years of reform and opening up, China's rapid economic development and continuous improvement in people's living standards have also widened the gap between the rich and the poor.

"To measure the income gap of a country, the internationally common indicator is the Gini coefficient." Li Shi introduced that the maximum Gini coefficient is "1", which means that the income distribution between residents is absolutely uneven; the smallest is "0", which means that the The income distribution between the two countries is absolutely even, but both of these situations will only appear in theory. Therefore, the actual value of the Gini coefficient can only be between 0 and 1. The smaller the Gini coefficient, the more even the income distribution, and the larger the Gini coefficient, the more uneven the income distribution.

What is China's Gini coefficient? According to data released by the National Bureau of Statistics, the Gini coefficient of China's residents' income was 0.479 in 2003, and reached a peak of 0.491 in 2008, after which it has decreased year by year. The Gini coefficient in 2014 was 0.469. In the early 1980s, the Gini coefficient of the national income gap was about 0.3. Li Shi analyzed: "The Gini coefficient close to 0.5 can be said to be a relatively high level. Only 10% of the countries in the world with more than 0.5; the Gini coefficient of major developed countries is generally between 0.24 and 0.36."

Liu Yuanchun, dean of the National Institute of Development and Strategy, Renmin University of China, said that the Gini coefficient between 0.47 and 0.49 reflects that the current income gap in China is still relatively large. In particular, the income gap between urban residents and between urban and rural residents is relatively large. "For example, the gap between urban and rural areas is about three times. According to urban wage statistics, the gap between high-income industries and low-income industries is about four times."

"While the income gap is widening, we are also facing the problem of expanding the property gap, and this problem is becoming more and more serious." Li Shi told reporters that in the past, most people equated the wealth gap with the income gap, but in reality The asset gap between residents is also an important aspect of measuring the gap between the rich and the poor. Data analysis of the past 10 years shows that the expansion of China s property gap is far faster than the growth of income gap, and the accumulation of personal wealth is very fast. In the past about 10 years, the average annual growth rate of per capita wealth has reached 22%, and the average annual growth rate of property values has reached 25%. The average annual growth rate of rural wealth accumulation is only 11%, equivalent to half of the national level.

According to the "Chinese People's Livelihood Development Report 2014" released by the Peking University China Social Science Survey Center, the Gini coefficient of China's property in 1995 was 0.45, and it was 0.55 in 2002. In 2012, the Gini coefficient of China's household net property reached 0.73. It has shown a rising trend, which is significantly higher than income inequality. In addition, there are two characteristics of property inequality at the household level: 1. The level of property of families with family members working within the system is significantly higher than that of families working outside the system, and the growth of family property working within the system is also significantly higher than Family outside the system. 2. The property growth rate of middle-income families is large, while that of low-income and high-income families is relatively small.

Li Shi believes that in the next few years, China's income gap may still be hovering at a high level. It will neither significantly increase nor decrease significantly. The Gini coefficient is expected to fluctuate between 0.45 and 0.50.

Complex and diverse causes--

The income gap under the market economy is reasonable, but the income gap caused by unequal opportunities, uneven resource allocation, and power rent-seeking is unreasonable.

What are the reasons for the widening wealth gap?

Li Shi believes that we must first correctly understand the gap between the rich and the poor and the income gap. "In the past, under the conditions of the planned economic system, egalitarianism was emphasized. Doing more, doing less, and doing better or worse; after entering the market economy, it emphasized distribution according to work. It is normal for income disparities between different industries, different regions, and different groups Yes, there is some reasonableness. "

Liu Yuanchun believes that objectively, there is a historical reason for the formation of the gap between the rich and the poor. China has a large population and a weak foundation, and the rural population accounts for the vast majority. After the founding of New China, the policy of prioritizing the development of heavy industry, agriculture to support industry, and rural to support cities has been implemented for a long time, resulting in rural development lagging significantly behind cities. In recent years, the state has increased investment in rural and central and western regions. However, due to different development bases and conditions, the gap between urban and rural areas, the eastern and western regions, and the income gap between residents will remain large. "For example, for the same civil servants, the minimum wages and provident fund deposit standards in the eastern and western regions are different, and there are also differences in benefits, social security, etc., which will cause income gaps."

Experts generally believe that the main reason for the growing gap between the rich and the poor is the phenomenon of unequal opportunities, irrational resource allocation, and power rent-seeking caused by inadequate reforms in some areas during the transition from a planned economy to a market economy.

Li Shi analyzed: "When the market system is incomplete, there are liquidity obstacles or market distortions, the trend of increasing income gap is difficult to avoid. For example, the labor market is not unified, and the household registration system has led to the immigration of rural migrant workers and urban workers in the income, social Guarantees and other aspects have operated for a long time in the "dual-track system"; capital and land transactions have not formed a real market; in some areas, the government has interfered too much in the market, and there are a large number of market access restrictions, making power rent-seeking Bringing illegal income, gray income, corrupt income ... all are too wide gaps between the rich and the poor caused by institutional factors. "

Experts believe that excessive government intervention, etc., can easily cause huge income gaps between the resource industry and some natural monopoly industries and other competitive industries. For example, the employees of monopolistic enterprises, especially senior executives, have high or even high incomes; for example, some people and groups rely on power resources to get priority development, get rich, or even get rich overnight, and the marginalized groups are difficult to develop. opportunity.

"Under the premise of honest labor and a fair market environment, there is a gap in people's income. This is reasonable and acceptable to society. For example, people who invest more in education can get better professional treatment. But because of starting points, opportunities and The income gap caused by the inequity of the process is generally difficult to accept. For example, the solidification of classes, insufficient mobility, unequal access to social resources, and unequal opportunities for individuals to strive to create wealth. For example, the second generation of the rich, the poor In the second generation, this exacerbated the trend of widening the income gap, and the sharing of social wealth was even more unfair. "Liu Yuanchun said.

A preliminary containment of differentiation

The income of residents has grown rapidly, and the Gini coefficient has achieved "six consecutive declines", but under the "new normal", narrowing the gap between rich and poor faces more challenges

Liu Yuanchun said that in the past five years, China's residents' income has maintained a relatively rapid growth. After reaching the "peak value" in 2008, the Gini coefficient dropped. This is mainly due to the country's introduction of a series of measures to stimulate economic growth after the impact of the international financial crisis. The 4 trillion yuan investment was mainly invested in infrastructure construction, which has driven the demand for migrant workers in the labor market. Has been growing faster. In addition, in recent years, the central government has attached great importance to the "three rural" issues, policies and inputs have been tilted towards agriculture and rural areas, and the comprehensive establishment of basic security systems such as the New Rural Cooperative Medical Service, New Rural Insurance, and Rural Dibao, has helped to reduce the gap between urban and rural Income gap.

The latest data from the National Bureau of Statistics shows that in 2014, the Gini coefficient of the national residents' income was 0.469, which was lower than 0.473 in 2013, achieving "six consecutive declines." In the whole year, the actual growth rate of per capita disposable income of rural residents was 2.4 percentage points faster than that of urban residents, and the income difference between urban and rural residents was 2.75, a decrease of 0.06 over the previous year.

Li Shi believes that for more than 30 years of China's reform and opening up, the economy has maintained rapid growth, and the income of low-income groups has also increased. Therefore, despite the widening gap between the rich and the poor, the "two-dimensional effect" has taken effect. On the one hand, many people are dissatisfied with the rapid increase in income of the rich, on the other hand, they are comforted by the increase in their income, and their social attitude is relatively stable.

However, experts also pointed out that economic development has entered a new normal, and the old problems and new situations of the gap between the rich and the poor are intertwined, and it is urgent to better study and respond.

"Economic development has entered a new normal, and has shifted from high-speed growth to medium-high speed growth, emphasizing the growth of 'better quality and better structure', and more dependent on innovation driven by capital and technology. This has a greater impact on labor-intensive industries. Large, will further affect the employment and income of non-technical, low-education, low-skilled talents. "Li Shi believes that in the next few years, the wage income of low-end labor will not grow as fast as in previous years, and may even decline. If the reform is not accelerated, and China's employment structure, social security, income distribution and redistribution policies are considered in a unified manner, it can be expected that the income gap will increase.

Liu Yuanchun said that the gap between the rich and the poor has a new situation worthy of attention in recent years. "In the past, the gap between the rich and the poor, the income gap, and the gap between urban and rural areas were the core. Since 2006, the gap between the rich and the poor within cities and towns has widened. The unfair increase in wealth caused by unfair capital stocks, such as the rapid rise in real estate prices To increase the value of real estate rapidly. It is becoming easier and easier to make money through capital, and it is becoming more and more difficult to make money through labor. Changes in economic life often give the rich a chance to make a fortune and bring losses to the poor. "

In addition, the gap between the rich and the poor has a certain stability, and the formation of strata and intergenerational transfers, some of the poor are moving from temporary poverty to long-term poverty and intergenerational poverty. If we do not want to change this situation, the gap between the rich and the poor will tend to stabilize and institutionalize, and it will become a social structure that is difficult to change, and the flow of social classes will be severely blocked.

Studies show that a large income gap will reduce the average consumption propensity of a country. Insufficient consumption will bring insufficient domestic demand, which will lead to slow economic growth. It will also affect the accumulation of human capital of low-income people. Excessive income gaps make it difficult for members of society, especially the poor and the rich, to build relationships of mutual trust. More importantly, it will make the systems and policies that rely on equal opportunities fail, threatening social stability and sustainable economic development. "According to the World Bank's classification standards, per capita national income of more than 12,000 US dollars is a high-income country. If it goes well, China may become a high-income country in 5-10 years. But the gap in income distribution is too large, it is necessary Make great efforts to solve the problem. Otherwise, we will greatly increase our risk of falling into the middle income trap. "Li Shi said.

Gap between rich and poor in other countries (link)

It is understood that among developed countries in Europe and the United States, the gap between the rich and the poor in the United States is relatively significant. Most of the Gini coefficients in European countries are between 0.3 and 0.4. The Gini coefficient in the United States in 2007 reached 0.45, and the Gini coefficient in 2013 was about 0.47. In Asia, Malaysia, the Philippines, and China have higher Gini coefficients, around 0.5. The Gini coefficient of Japan and South Korea is about 0.26. In Latin America, Brazil and Argentina have higher Gini coefficients, both greater than 0.5; countries with higher Gini coefficients in Africa are concentrated in South Africa, with Gini coefficients of about 0.6.

After the 2008 financial crisis, the world has paid close attention to the phenomenon of the gap between the rich and the poor. According to statistics from the United Nations Economic Cooperation Organization, the share of global labor compensation in GDP has fallen from 50% to 30%, indicating that the global gap between the rich and the poor is widening. In recent years, there have been strong international calls for controlling capital and limiting the income of financial executives. Europe and the United States and other countries have also adopted a series of measures in this regard. ^[2]

This is

Income of urban and rural residents

The survey shows that in recent years, China's farmers' income has grown fastest. However, the income ratio of urban and rural residents has expanded to 3.33: 1, with an absolute gap of 9,646 yuan, which is also the largest gap since the reform and opening up. This was disclosed by Minister of Agriculture Sun Zhengcai at the Fourth Session of the Eleventh National People's Congress Standing Committee. In this regard, the analysis of the relevant institutions of the National People's Congress is that the fundamental reason for the increasing income gap between urban and rural residents is the low base of farmers 'income, and at the same time affected by the current national income distribution pattern, the growth rate of farmers' income is lower than

Urban-rural gap

The growth rate of the national economy and the growth rate of per capita disposable income of urban residents. (Jinghua Times) August 29

Extremely low urban-rural gap

It is reasonable to say that the base of peasant income is low and it is affected by the current pattern of national income distribution, which is the reason for the widening income gap between urban and rural residents. But if it comes down to the root cause of the widening gap, I still find it hard to convince. My question is: What causes the low income base of farmers? Why is it causing the existing pattern of national income distribution?

Urban-rural gap dual management

In fact, the large gap between urban and rural residents' income does not start today. As for the reason, the most fundamental lies in China's urban-rural dual management system, that is, the urban-rural division management system. Due to this dual system, there are differences in national income distribution, resource allocation, and prices of industrial and agricultural products, and the final reflection is the difference in income between urban and rural residents. Of course, this difference exists at different times Big and small.

Since the reform and opening up, some shortcomings of the dual urban-rural management system have been abolished to a certain extent. For example, farmers can work in cities, and eligible people can become urban residents.

The urban-rural gap is hard to bridge

However, the dual management has not been fundamentally changed. The new system has not been fully established. There is still a gap between urban residents and rural residents. In terms of national income distribution, urban residents are still more important than rural residents. The scissors gap between industrial and agricultural products continues to widen, making farmers' income in agriculture low. The distribution of farmers who work in cities is another set. Even if migrant workers and urban people are engaged in the same job, the quality of work is not inferior. It is still much lower than urban employees, and cannot generally enjoy social welfare benefits such as medical insurance, social endowment insurance, unemployment insurance, and housing provident fund. Especially under the pressure of inflation in our economy, the price of agricultural means of production has risen sharply, the peasant's living consumption index is higher than the urban resident's living consumption index, and the peasants' income increase lacks new support, so the income gap between urban and rural residents naturally widens .

A few years ago, economist Lin Yifu believed that if the reform was not in place, although the income of farmers would increase, the income gap between urban and rural areas would gradually widen. Practice has proved that Lin Yifu's judgment is correct.

Urban-rural gap nurturing agriculture

Regardless of the rapid development of the national economy or the tremendous achievements in reform and opening up, farmers have made tremendous contributions and sacrifices. Now is the time to nurture agriculture, so that farmers can effectively enjoy the fruits of economic development and reform and opening up, and narrow the urban-rural income gap, or even eliminate it, the fundamental way is to completely reform the urban-rural dual management system.