Abstract In this paper, we build a dynamic income distribution model to research the relationship between income gap and economic growth. The result shows that if the labor market was segmented, the distribution would be a gaming process, and the initial condition inequality in the process will lead to the income gap between the different segments, which would be more and more serious in the subsequent process. The empirical research of this paper supports this conclusion, implying that the income gap of China maybe came from the segmentation of labor market. So the most important policy to narrow the gap is to improve the liquidity of labor market.
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