Research On The Mechanism Of How The Income Gap Of Chinese Residents Affects Consumption Deman

To build a new development pattern,we must adhere to the strategic basis of expanding domestic demand,including investment and consumption.After the reform and opening up,the Chinese economy has created a miracle of rapid development,with a high savings and high investment linkage mechanism.As the investment environment changes,the driving effect of investment on economic growth begins to weaken,and the responsibility of expanding domestic demand naturally falls on consumption.Expanding consumption requires promoting employment,improving social security,optimizing income distribution structure,expanding middle-income groups,and promoting common prosperity.Among them,the key is to promote income growth and narrow the income gap among residents.To this end,the Party and the state have formulated a series of measures to increase household income and thus increase consumer demand.The article uses a combination of bibliometrics and empirical and normative analysis methods to conduct in-depth analysis and form the following content.Firstly,a literature review and theoretical basis on the impact of income inequality on consumer demand.There is a wealth of literature on the impact of income inequality on consumer demand.This article uses bibliometric software(Citespace)for keyword search,focusing mainly on the relationship between income inequality and consumer demand;The relationship between status-seeking and consumer demand;Income inequality,the relationship between status-seeking and consumer demand,and the relationship between social security and consumer demand.To better analyze the impact of income inequality on consumer demand,this article chooses to study theoretical foundations including Marx’s theory of income distribution and consumption,socialist theory of income distribution and consumption with Chinese characteristics,the Western economic theory of income distribution and consumption,and status-seeking theory.Secondly,the historical evolution and correlation description of the income gap and consumption demand among Chinese residents.Theoretical research must start from facts.This article first conducts a historical review of the changes in income gap and consumption demand among Chinese residents,to clarify the factual changes in income gap and consumption demand.Secondly,it reviews the synergistic evolution of income gap and consumption demand among Chinese residents and finally describes the correlation between the two in historical evolution.It is found that as the income gap expands,consumption demand exhibits an "inverted U-shaped" change characteristic.Thirdly,theoretical analysis of the impact of income inequality on consumer demand mechanism among Chinese residents.There is a correlation between the income gap of Chinese residents and consumer demand in the historical evolution.Whether this correlation contains a causal relationship requires theoretical analysis of the mechanism by which income inequality affects consumer demand.Firstly,the widening income gap within a certain range will result in a relative or absolute increase in consumption;Secondly,continuing to widen the income gap will result in a relative or absolute reduction in consumption;The impact of widening the income gap on consumption is not linear,and the impact of widening income gap on consumption demand varies at different income levels;Finally,the impact of income inequality on consumer demand is also influenced by social status pursuit and public transfer income.Fourthly,the article verifies the non-linear "inverted U-shaped" relationship between income inequality and consumer demand through benchmark regression.Based on this,a panel threshold regression model is further used to investigate the specific trend of the "inverted U-shaped" relationship between income inequality and consumer demand and to explore the threshold characteristics of the impact of income inequality on consumer demand.Fifthly,the mechanism of how the income gap among Chinese residents affects consumer demand is tested.This article examines the transmission mechanism of social status-seeking between different income levels(threshold values).The mechanism of seeking social status shows that in the low-income stage,the widening income gap is conducive to increasing status and nonstatus consumption.When the threshold is crossed,the further expansion of the income gap will lead to residents continuing to increase their pursuit of status goods and reduce their consumption of nonstatus goods.That is,the "crowding out effect" is obvious,which means that the fundamental reason for the income gap to suppress consumption demand after crossing the threshold is the structural imbalance of consumption.In addition,public transfer income exhibits a stable moderating effect at different income levels(threshold values).Sixth,research conclusions and policy recommendations.Based on historical and practical deduction,theoretical deduction,and empirical testing of the income gap and consumption demand of residents,the research conclusion of this article is drawn.Based on the research conclusion,this article proposes policy recommendations to narrow the income gap and expand consumption demand.The article has conducted the above research and achieved some innovations:(1)The study found that there is an inverted U-shaped relationship between the income gap of Chinese residents and consumer demand.In the past,research on income inequality and household consumption mainly focused on the "inhibitory effect" and neglected the "demonstration effect".This article theoretically discusses the dual effects of income inequality on household consumption,separates the "inhibitory effect" and the "demonstration effect" through econometric models,and explains the reasons why the "inhibitory effect" currently dominates the current state of China’s economic development and cultural background.(2)The introduction of social status-seeking factors analyzed the mechanism by which income inequality among Chinese residents affects the presentation of consumer demand.(3)Research has shown that public transfer income has a moderating effect on the impact of income inequality on consumer demand.(4)The study used microdata to organize and match survey data based on a national sample,and analyzed the mechanism by which income inequality among Chinese residents affects consumption demand,thus achieving a research perspective transformation.