Study On The Impact Of The Expansion Of China's Urban Households' Income Gap On Consumption Demand

Nowadays, China's economic growth relies heavily on the investment and exportation. The inadequacy of domestic consumption demand especially the residents' consumption demand that can be caused by a variety of factors, one of which is the gradual expansion of income gap, is becoming a key factor to constrain China's current economic development. As China is a country with obvious dual economic structure, there is a large difference between urban residents' consumption and that of rural. In this thesis, we only study on the relationship between the income gap of urban residents and the consumption demand, and analyze what and how much dose the enlargement of the gap affect the consumption. China's economic growth should depend more on consumption. How could we adjust the income distribution of urban residents in order to stimulate consumption demand? This is a research topic with important theoretical and practical significance.With regard to this, the thesis firstly summarizes the existing research and makes a brief commentary. Next, it presents the subject-selecting background, study purpose, significance, train of thought, and methods. Then, the thesis defines the relevant concepts and indicators, consumption theories, and clarifies the path and mechanism of the income distribution's impact on consumption demand. It then comes to a conclusion that the income distribution will affect consumption demand theoretically and the narrowing of the gap can expand the demand accordingly. Based on reviewing the theories, the thesis describes the actual situation and trend of the income gap of Chinese urban residents. It then makes an analysis of consumption effect mechanism from three aspects including the consumption propensity, structure and rate. Furthermore, it presents a proposition that "The enlargement of China's urban residents' income gap is not conducive to the growth of consumption demand; the narrowing could be." Then, we regard urban GINI coefficient and the average residents' consumption propensity as variables, and make the regression analysis by using the statistical software E-views. Study results prove that the enlargement of the income gap indeed makes a significant impact which is negative on the consumption demand. Finally, we analyze the causes leading to the enlargement of the income gap, and put forward the proposals for narrowing the gap to expand consumption demand from three aspects as follows: Improve the market economy system, and establish an environment for fair competition; Improve the macro-control system, and exert the government's regulation; Improve the building of the non-profit organization, and pay attention to the effectiveness of the third distribution.