The Evolution Laws Of Demand For Cars Of Urban Residents Under The Perspective Of Income Change

The Evolution Laws of Demand for Cars of Urban Residents under the Perspective of Income ChangeDuring the 30 years of China's economic transition, the standard of living of urban residents in China has undergone tremendously changes. On one hand, the substantial increase in income of urban residents has brought changes in consumer's behavior, food consumption expenditure has decreased and a large increase in ownership of durable goods per hundred families shows the consumption structure of urban residents in China is changing; on the other hand, with the overall income levels increasing, a widening gap of income distribution was an important reason which led to the propensity to consumption of Chinese urban residents declining. In addition, the rapid development of financial intermediation in China also changed the income distribution, and then had an impact on consumer demand. Some traditional theory of the western consumer exogenous and stable assumption is controversial under the special background of China's economic development. At the same time, the research on the pattern of Chinese residents'income distribution changes was still in its infancy, and little detailed characterization has done on its internal changes. Based on consumer durables consumption behavior reflecting China's transition characteristics, this dissertation focused on the characteristics of the changes in consumption structure during transition period. A further study was to explore the effects on consumption demand by different income classes'changes which based on the dynamic evolution of income distribution.In view of the above-mentioned facts, from the perspective of income distribution, the research hope to discuss the effects on the consumer durables by income distribution changes and consider the automobiles as an example, through the review of traditional consumption and income distribution theory. The main contents of this dissertation are as follows:Chapter 1 summarized the western traditional consumption theory and income distribution theory firstly. Secondly, based on the overview and comment of the application, the problems of this dissertation and design of its structure are propounded.In chapter 2, we defined index indicators to describe the purchasing power of urban residents and the special characteristics of the total income, while using kernel density to estimate income distribution and basic law vividly. And then, focuses on the income distribution dynamic changes of China's urban residents based on the micro household survey data provided by CHNS. The empirical results show that, firstly, the income distribution estimation on CHNS database from 1989——2006 shows that, due to the China's reform and economic growth, the social welfare has got a promotion. However, the mid&low income families are still the main part of China's urban residents. Furthermore, the growth speed of different income group is varied which aggravates the inequality degree. Secondly, in the analysis process of the income distribution's liquidity, despite the proportion of the low income group has always been on decline, mid income group reduced recently revealed the extended tend of income gap. During the decomposition of income changes, the improvement in income level and social welfare has the mainly impact on urban residents, at the same time, low&high income group gathering and mid income group reducing are caused by existence of interval heterogeneous. Due to the inequality, low income group didn't flow to a higher income level while there is unexpected increasing in high income group which should be more difficult. Finally, the consumer's behavior changed with the income distribution transformation, which induced to the sudden and sharp demand for durable goods.In chapter 3, the provincial panel data of China from 1997 to 2008 are used to describe the development of national automobile market qualitatively which appears a obvious non-linear growth path and stays at the different stage of growth curve with regions varied. Furthermore, the estimation result shows that the satiation point will be achieved around 2025 to 2030, and the corresponding automobiles ownership will rise to about 153.44 million with the disposable income level at 65000 to 70000 Yuan by using the method of dynamic GMM and panel ECM. These empirical results also demonstrate that rapid increasing in urban residents'income level is the main reason of the significant growth in automobile market in recent years. According to it, the current family car ownership is just across the elasticity point of long-run growth curve and has entered a rapid growth period.Chapter 4 discussed the general intertemporal consumption demand model under the neoclassical framework, and then extended the simple neoclassical model with linear budget constraints and complete market assumptions of consumer behavior to the case of durable goods. Finally, we got the applied durable goods demand model. Because there is obvious influence of China's urban residents'accumulated wealth at late 2007 in samples, while demand for automobiles purchasing is a relative stationary serie, the theory of structural breaks is used to verify the structural break point in September 2007. Later on the cointegration analysis on accumulated wealth and automobile demand by utilizing the Engle and Granger two-step method shows that there is no cointegration relationship between them without considering the structural breaks, however, variable structure cointegration analysis proved the contrary facts. Actually, from long-term perspective, the sudden changes of accumulated wealth index have little significant negative impact on the automobiles purchasing decision, and the effects on the durable goods market will be very limited eventually.Chapter 5 studied the effects on the sub-grade durable goods demand by income distribution changes of China's urban residents. The empirical evidence shows that, first, because of the improvement in income level, most consumers prefer high quality with lower cost cars, but the demand for high-grade cars doesn't rise and fall sensitively with it. Second, there is a significant promoting in both purchasing power and purchasing quantity which gives a rise to low&high grade residents'average income level and group proportion, which is the primary source of the growth in overall automobiles market. Nevertheless, mid income group is the stable and sustainable diver of automobiles demand. Therefore, in a spirit of raising income level of the whole nation, enhancing the low-grade income level and ensuring increasing and steady proportion of mid income group is the source power which can lead to growth of automobiles consumption demand in China.