Econometric Research On Non-linear Evolution Characteristics Of Consumer Market Under Income Distribution Changes

The history of reform and opening up, made our country became the world’s second biggesteconomy, greatly shortened the gap between the western developed countries. This miracle of therapid economic growth in a short period has astonished the world. But behind this phenomenon,our country economy also exposed some problems at the present stage. Such as the income gap istoo large, insufficient domestic demand and excess capacity, etc. These economic problems are alsopresented intensively and connectedly in a short period of time. These problems which China facesare more complex and intense compared with western developed countries at the same stage ofdevelopment. Combined with the influence from the external environment, our country has to dealsimultaneously with the slowdown in economic growth, making difficult structural adjustments,and absorbing the effects of the previous economic stimulus policies. In such an environment, thereis need to build the new theories and new ideas suitable for China’s national conditions to solve theproblems that impede economic growth.This paper presented a theoretical expectation of consumer market non-linear evolution underthe background of income distribution changes. This means that income distribution changes leadto nonlinear growth trend from demand exceeds supply and prices rise in some consumer market,and lead some others into nonlinear declining trend from supply exceeds demand and price fallunder the market mechanism. And this paper follows the research mentality of “EconomicGrowth→Income Distribution Changes→Consumption Distribution Development→Non-linearEvolution of Consumer Market→Structure Transition and Rural-Urban Differences underNon-linear Growth”, verified and explained the theoretical expectation roundly.Firstly, we have explored the relevant evidence from income distribution and consumptionunder the system of western consumption theory. On this basis we presented the theoreticalexpectation in this paper. And we provided the mathematical derivation of the theoretical modelunder the hypothesis of heterogeneous preferences. The theoretical analysis indicated that incomedistribution changes can promote consumer market on early stage, and the effect on developmentstage and decline stage depend on the changes of location and shape for density function. Therelative position differences from income interval and main consumption interval of differentincome groups, which is key reason for the non-linear evolution characteristics of consumption.On the basis of the above expectations, the first step is to verify the authenticity of consumption distribution development caused by income distribution changes. We selected CHNSand CHIP data and estimated the residents’ income and consumption distribution by kernel density.The results showed that residents’ income is on the rise, but the income growth difference ofdifferent income groups led to the widening income gap, and the characteristics of consumptiondistribution evolution are nearly consistent with the change trend of income distribution. Further,through constructing counterfactual income variable, built an empirical model to explain theinfluence mechanism of consumption distribution evolution from the different distribution changetrends, and used unconditional quantile regression estimation. The results showed that the averageeffect of income distribution changes to consumption distribution has already exceeded thevariance effect, which led to the emergence of insufficient demand. And widening income gap hasimpeded consumption of all quantiles on consumption distribution.Thereafter, this paper also needs to further verify the non-linear evolution characteristics ofconsumer market that is derived from income distribution changes. Selecting cross section data ofCHIP for2002and2007, and using the sample splitting threshold estimation, we have describedthe non-linear evolution characteristics in different expenditures. The results indicated that all kindsof consumer market of urban residents existed significant income threshold characters, and thenumbers of income threshold would change with time elapsing. Thus through judgment thedeveloping situation of different consumer markets, and analysis the effect for consumer marketsthat is derived from changes of income level and group size in different income groups. We foundthat the trends of the non-linear evolution characteristics are nearly consistent with the directions ofresidents’ consumption structure change, and the influence of residents’ income level onconsumption and the contribution of consumption to economic growth, are no longer have thesignificant overall effect.And in order to further explore the structural reasons behind consumer market that presentsnon-linear growth. Considering the market for durable goods, and building the two-stage Engel-AIDS model of urban residents’ durable goods consumption, this paper had an elaborate analysis ofchange characteristics and development law in durable goods consumption structure before andafter non-linear growth. We found that durable goods consumption structure presented fourdifferent types of the change trend before and after non-linear growth. Because of thenon-compensated own price elasticity is constant before and after non-linear growth, indicate thatthe durable goods own price is relatively stable, then the reasons of non-linear growth mainly comefrom income distribution changes.Return to the point of view of distribution once again. Based on the CHFS2011data inautomobile market between urban and rural areas, using conditional quantile regression and quartile decomposition method, this paper also explored that the characteristics and evolution lawof urban and rural consumption distribution under the background of income distribution changesfor a new perspective of solution for Excess Capacity which is derived from non-linear growth ofconsumption. The results are as follows: Residents’income of urban and rural has become the mainfactors influencing the large durable goods such as automobiles. The income elasticity of differentquantiles in automobile consumption distribution shows the characteristics of "U" type for urban,but the automobile market still in its infancy for rural, and the influence of income on automobileconsumption is clearly and strongly. The difference of automobile consumption between urban andrural areas is very significant, meanwhile the contradiction between rural residents’ desire ofdemand and the shortage of market products is becoming more and more prominent. And this hastriggered huge gap of rural consumption demand.In the end, this paper has given the all-around answers for the basic reason, solution way andannouncement, through the theoretical expectations and the empirical results.