The Impact Of Urbanization On Household Consumption

Urbanization is the process by which rural surplus labor is concentrated in cities and towns,which helps to expand the consumption demand of residents through the"aggregation effect".However,in the process of urbanization,consumption and output are increasing at the same time.Therefore,it seems difficult to draw obvious conclusions about how the residents'consumption rate changes.In China,with the advancement of urbanization,the consumption rate of residents has been declining:from 2000 to 2018,the urbanization rate has increased from 36.22%to 59.58%,but the consumption rate has fallen from 46.72%to 39.37%.So,is this a general law of economic and social development or a phenomenon unique to China.As China's urbanization continues to advance in the future,how will the residential consumption rate evolve?A large number of literatures have studied this phenomenon.Although the research conclusions are not uniform,most literatures tend to believe that there is a spontaneous"U-shaped"evolution relationship between the urbanization rate and the consumption rate of residents.At present,China is still on the left half of the"U-shaped"curve,so there is a reverse relationship between the two.After the urbanization rate has risen to a certain level,the advancement of urbanization will be accompanied by an increase in the consumption rate of residents.However,these documents have not been empirically tested with massive data from many countries,and it appears that this study lacks sufficient empirical evidence.This article attempts to use the panel data of 162countries(regions)in the world from 1960 to 2017 to conduct empirical research to fill this gap.This paper finds that this evolutionary trend cannot occur spontaneously,and industrial productivity plays a decisive role in the evolution process:in countries(regions)with high industrial productivity,there is a positive correlation between urbanization rate and household consumption rate;In lower countries(regions),there is a negative correlation between urbanization rates and household consumption rates;in countries(regions)with average industrial productivity,the relationship between urbanization rates and household consumption rates is unclear.Specific to China,China is undergoing a period of transition from a planned economy to a market economy and a transition from a dualistic urban-rural economy to a monolithic economy.Under the constraints of the rural land transfer system and urban household registration control,as well as the urban administrative management system,urbanization has certain unique characteristics:population urbanization lags behind Land urbanization and different cities have different administrative levels.First,China's urbanization is accompanied by a declining urban population density.From1995 to 2018,China's urban built-up area expanded from 19264 square kilometers to59465 square kilometers,and the urban population increased from 352 million to 831million.However,the indicator used to characterize the urban agglomeration effect is urban population density has continued to decline,from 18600/km~2 to 14200/km~2.In theory,an increase in urban population density can maximize the agglomeration effect of cities and towns,increase social production capacity,expand market size,increase employment opportunities,increase household income,and increase household consumption rates.Therefore,this article believes that the decline in urban population density is likely to be one of the reasons for the declining resident consumption rate.Based on this,this article proposes a theoretical hypothesis in Chapter 5:Urban population density,not population size,is the dominant factor affecting residents'consumption rate.The empirical test results based on the data of 282 prefecture-level panels cannot overturn this hypothesis.Secondly,another unique feature of China's urbanization is that cities have different administrative levels:municipalities directly under the Central Government,sub-provincial cities,provincial capital cities,ordinary prefecture-level cities,and county-level cities.Cities with different administrative levels have large differences in resource agglomeration capabilities and large population sizes.Differences in the ability of cities to attract populations will lead to differences in capital broadening and deepening,and housing needs:On the one hand,the higher the administrative level of a city,the greater the amount of capital per capita,the greater the number of new inflows,and the greater the urbanization process.Quickly,the more capital you need to“fill out”,the greater the proportion of government investment expenditure.On the other hand,the housing demand of new migrants has led to the rise in the price of commercial housing,increasing the cost of living and reducing the ability of residents to consume.The two above-mentioned crowding-out effects are amplified under the investment-driven urbanization development model,resulting in cities with higher administrative levels and relatively lower consumption rates.Then,using prefecture-level panel data to conduct empirical analysis,it was found that the above hypothesis cannot be overturned.Finally,urbanization is accompanied by changes in the pattern of social income distribution,which will have an impact on residents'consumption.Existing research literature on the relationship between urbanization and income distribution,income distribution and residents'consumption is abundant,but few literatures focus on the transmission mechanism between urbanization and residents'consumption.The key to the internal mechanism of residents'consumption.This paper attempts to integrate the existing research conclusions and deeply analyze the internal mechanism between urbanization and residents'consumption.Specifically,on the basis of reviewing the existing literature,this article speculates that one of the intermediary chains influencing residents'consumption in urbanization is income distribution,that is,there may be an intermediary effect on income distribution between urbanization and residents'consumption.So,is this theoretical assumption correct?Will urbanization affect the consumption behavior of residents by changing the pattern of social income distribution,thereby forming a transmission mechanism of“urbanization?income distribution?resident consumption”at the domestic regional level?How to expand the consumer demand of residents along this transmission chain?This paper confirms that there is a partial mediating effect on income distribution between urbanization and residents'consumption,and this indirect effect can explain about 27%of the total effect.Based on the above research conclusions,this article has the following enlightenment:First,China should base on the domestic industrialization and urbanization development stages,follow the industrial structure evolution law,strengthen industrial basic capabilities,increase industrial productivity,and give full play to the role of urbanization in stimulating consumer consumption creating condition.The second is that we should gradually change the previous“spreading the pie”style and extensively expand the urbanization development model,take the intensive urbanization development path,tap the urban potential,increase the land utilization rate,increase the urban population density,and give full play to the effect of urban agglomeration The role of the residents'consumption rate.The third is that the power relationship between cities determines the resource agglomeration capacity.The powerful resource agglomeration capacity possessed by cities with high administrative levels is a fundamental factor that inhibits the increase in the consumption rate of residents.Under the current strict urban hierarchical management system,if the urban household registration control is rashly released,high-policy cities will inevitably"swell",intensify the occupancy of the residents'consumption share,and further reduce the residents'consumption rate.Fourth,the three variables of urbanization,income distribution and household consumption in the transmission chain should be fully considered.Smooth urbanization will influence the transmission chain of residents'consumption through income distribution.According to the internal mechanism between urbanization,income distribution and household consumption,Formulate policies and measures to expand residents'consumer demand in a targeted manner.