ABSTRACT

Purpose – As the market economy deepens, the issue of social equity caused by income distribution becomes more and more significant. Therefore, this paper attempts to exploit the determinants of income distribution in terms of macroeconomics. Research design, data, and methodology - The data set from 1990 to 2017 will be used to conduct an empirical analysis under a menu of econometric approaches such as vector autoregressive model and impulse response function. The income distribution and other macroeconomic variables such as foreign direct investment and employment will be used to conduct an empirical analysis to explore the determinants of income distribution in terms of macroeconomics. Results - The findings indicate that the income distribution is related with macroeconomics. More specifically, the export, import, GDP and foreign direct investment play a role in deteriorating the income distribution. Conversely, the industrialization, inflation and employment can improve the income distribution. Unfortunately, the inflation and employment do not get through under 5% significant test. Conclusions – Due to that a good income distribution can be beneficial for both a country and an individual, this paper provides a new scope for China’s government to improve its income distribution in terms of macroeconomics.

KEYWORD

Income Distribution, Macroeconomics, Econometric Approaches.

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