| 简介： | Abstract: In this paper, we investigate empirically the relationship between income inequality and economic growth, and the channels through which such a correlation arises, in the post-reform period of China. Using the panel data at the province level of China from 1984 to 2012, we find that economic growth and inequality are positively correlated, after controlling for the standard determinant variables of growth. In order to better understand the channels that give rise to this correlation, we examine the growth mechanisms as outlined in the unified growth theory (Golar and Moav, 2004), according to which economic growth is driven by physical capital accumulation in the first stage before transiting to the second stage where human capital gradually becomes the main driving force. Our estimation results from the panel-data models and system GMM show that the positive relationship between inequality and growth in post-reform China largely arises from the channel of physical capital accumulation, in spite of a negative impact of inequality on growth arising from the human capital channel. These findings suggest that the performance of Chinese economy in the post-reform era is consistent with the early stage of modern growth whereby high investment and physical capital accumulation provide the main driver for both rising income inequality and economic growth.
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