Chinese Residents' Income Differences And The Relationship Between Level Of Consumption Research

Employing historical and logical methods, this paper mainly analyzes the relativity between income inequality and consumption level of China inhabitants. Although this paper draws the same conclusion with others', the method is different. All previous studies were in virtue of Keynes' "marginal propensity to consume decrease progressively" law, but this paper establishes a simulation model with two variable: income inequality and consumption level of china inhabitants, and then the paper demonstrates negative relativity between them.The paper is divided into four parts and composed by five chapters. In the first place, the paper chooses variable to measure income inequality mainly. Firstly, it introduces several common measurement indexes, and introduces Gini index which used frequently in economics emphatically. And then the paper introduces another index —the coefficient of variation. Compared with Gini Index, the coefficient of variation is a better variable, and the paper adopts the coefficient of variation finally.Secondly, this paper mainly establishes the consumption function of china inhabitants on the basis of analysis of china inhabitants' consumption behavior. Then this paper estimates and exams the consumption function. The first two parts of the paper are the basis for seeking the functional relationship between income inequality and consumption level. In order to bring the two variables into a model, it must choose the proper measurement index and sets up the consumption model which accords with the consumer behavior of our country.Thirdly, the paper introduces former learners' study on the relationship between income inequality and consumption level. Although the Absolute Income Hypothesis and A Hypothesis are both support that income inequality has a certain influence to consumption level, they are based on Keynes' "marginal propensity to consume decrease progressively" law. Then the paper brings the two variables into a consumption model, and the paper demonstrates negative relativity between them. Afterwards, the paper exams the negative relativity, and the result accords with the theory analyses, that is to say, income inequality enlarges consumption level.The last part is conclusion and policy analysis, and the most important conclusion is the negative relativity between income inequality and consumption level. Then the paper provides some policy advices.The paper makes some innovation on the research of former learners as follows: Firstly, it introduces the concept of rate of income inequality, then it analyses the relationship between rate of income inequality and coefficient of variation, and at last the paper adopts the coefficient of variation. Secondly, it establishes a consumption model containing two variables of income inequality and consumption level, and it proves negative relativity between them by way of mathematics reasoning.