Comparative Analysis Of Urban Residential Consumption Inequality And Income Inequality In China

Since 1990s Chinese economy has been undergoing rapid growth, but with inequality at the same time, such as inequality of district, between urban and rural areas,development of different ownership systems. When analyzing the inequality of Chinese economy development, lots of domestic scholars make more study on income inequality degree, focus on the character of income inequality, the reasons and its effect on Chinese economy development.Some of foreign scholars think: consumption inequality is more appropriate for measuring the inequality in economy development process than income inequality because it can measure the living level of individual and citizen more directly. Individual labor income exists short-term fluctuation.If consumers can react to the short-term income fluctuation by consumption credit or saving, these consumers'consumption will not be affected by income fluctuation. So during a certain period income is more volatile than consumption and the inequity degree is higher than what it will be in reality when measuring the inequality of citizen living level by income inequality. And if citizen can smooth their consumption, the increase of income inequality degree caused by major short-term fluctuation might means that the inequality degree of citizen welfare distribution has not been greatly improved. Usually social welfare level depends on individual and citizen's family living level. According to the above analysis it is more reasonable to measure Chinese citizen living level by the inequality degree of consumption distribution.The article mainly compares and analyzes the equity status of income and consumption distribution among urban citizen. Chinese urban citizen is divided into seven classes according to their income. According to the consumption behavior characteristics of different income classes in Chinese urban areas, the article uses inequality indexes to compare and analyze the inequality degree of income and consumption distribution among the seven income classes and the possible reasons for the difference. The result shows that consumption is more equal than total income and disposable income ,the deterioration degree of consumption inequity is not so sharp as income inequity; the change of consumption and income ratio of each class is different. The ratio is increasing in high income class, decreasing in low income class and keeping stable in middle class. The changing degree of consumption proportion of all classes is lower than income's . After analyzing the reasons that consumption is more equal than income, the author makes the following conclusions: the increase of income inequity is caused by temporary income fluctuation, urban citizen can react to most of these temporary fluctuation by consumption credit, using saving and government transfer payment. Chinese economy development exist obvious dualistic structure character. The insufficiency of this article is that it only analyzes the income and consumption inequity of urban citizen, rural citizen's will be analyzed in the future.