The Analysis Of The Influence Of Income Inequality On Consumption--Comparative Analysis Of China And The United States

At present, most of the research of how the income inequality effects the consumption follows the research methodology of the United States. But China has its own specific national conditions, requires a specific analysis of specific issues. In this paper, study of the influence of income inequality on consumption has been made. Meanwhile this paper comparatively analyses the empirical results of China and the United States, in order to come closer to the reality of the Chinese analysis of the conclusions.In the empirical analysis, both univariant and the bivariant regression analysis are carried out, and the research methods used in the paper is comparative analysis of Sino-US comparison. First, use Gini coefficient for the independent variable and the consumption rate for the dependent variable to construct univariant regression model. The conclusions of this simple analysis are imperfect. On this basis, the introduction of uneven income from univariant analysis and uneven income and income as independent variables to the consumer to be variable, for bivariant regression analysis, to draw a more reasonable explanation. These two methods, respectively, of China and the United States of data analysis, and comparison, the income inequality is not the main reason for spending less than conclusions.Use Gini coefficient as the independent variable, the univariant analysis shows that the along with the expansion of the income inequality between cities and towns, in another word, the increase of the Gini coefficient, the average consumption of residents declines and so does the consumption demand. In another words, in such a simple one element analysis, the expansion of inequality between residents in the income is considered as the cause for the insufficient in residents' consumption growth. However, as a developing country, economic development of our country is yet unbalanced, the overall level of productivity of the nation is still very low. In such conditions, the widening income inequality and income level are carried out simultaneously. According to the law of diminishing marginal utility, when the level of income rises, at the same time, consumption is bound to a certain stage to begin to decline. Since then, the bivariant regression analysis is introduced, using uneven income and income as independent variables. It is concluded that although the income inequality has a negative correlation with the consumer relationship, but it is not mainly caused by insufficient consumption, the more important reason is that the overall level of people's income is relatively low.On the basis of policy recommendations are: on one hand we need to narrow the current inequality between the incomes of residents, the choice of adhering to the socialist market economy and efficiency and fairness under the premise of government by giving full play the functions of income redistribution, the redistribution policy to take reasonable and the creation of policies to increase employment opportunities, improve low-income people's income, reducing the proportion of low-income population, efforts to expand the proportion of middle-class population, so that the income inequality between urban residents to maintain a reasonable scope, we must also find ways to improve China's overall income, improve their living environment, improve the protection of life of the residents in order to promote effective consumer demand and the upgrading of consumption structure optimization. On the other hand, in order to enhance people's consumption expenditures, the most effective solution is to find ways to improve the overall income of the residents.