Chinese economic growth driven by profit, not wages, reshaping income distribution.
The article analyzes how the distribution of income in China affects its economic growth from 1978 to 2010. By using a specific economic model, the researchers found that changes in labor income had little impact on consumption, while an increase in profit share led to more investment. Surprisingly, changes in labor income did not affect net exports. Overall, the study suggests that China's economic growth is driven by profits.