Analysis Of The Impact Of Urban-Rural Residents Income Gap Upon Consumption Demand In Shaanxi

Currently, China has seen a long-term economic growth with a high speed, however, the demand of resident consumption has exponentially decreased. Meanwhile, the issue of regional inequality, in particular, urban-rural income gap is widening, which may exacerbate the urban-rural gap in terms of resident consumption and eventually result in the deficiency of demand of resident consumption. It is, therefore, essential that an analysis on the change of urban-rural income gap and its influence upon demand of resident consumption be performed, which will be beneficial to further the understanding of regional income disparity and the deficiency of resident consumption in China as well as the evaluation of relevant policies.Based upon analyzing the related literature on urban-rural income gap and demand of consumption, the present study will adopt comparison analysis, unit-root and the theory of co-integration test, vector auto regression as well as process-tracing analysis in order to evaluate the impact of Shaanxi urban-rural income gap upon demand of consumption. First of all, from the perspective of urban-rural income ratio, urban-rural Gini coefficient as well as Theil Index in term of urban and rural areas, the paper documents the historical change and status quo of Shaanxi urban-rural income gap through the time-series data of 1978-2009. Secondly, the study will comprehensively analyze the current situation of the demand of resident consumption and factors accounting for its deficiency through the level and structure with regard to resident consumption. Further, the present study evaluate the impact of Shaanxi urban-rural income gap on the disparity of demand of resident consumption, which is based on three aspects of urban-rural income gap index, permanent income gap index as well as the demonstration index of urban-to-rural area. Eventually, in view of above-mentioned empirical results, the study will give a comprehensive perspective of the urban-rural income gap upon the demand of resident consumption. The results demonstrates: (1) since the implementation of Reform and Opening-up Policy, Shaanxi urban-rural income gap has increasingly ascended, which results from the large difference of economic development between urban and rural areas in Shaanxi province. (2) The growth speed in terms of the total number of resident consumption gradually retards, meanwhile, the urban-rural consumption gap is increasingly enlarging. And the consumption mode in terms of urban residents of Shaanxi transforms from the subsistence consumption to the enjoyable consumption, nevertheless, the consumption of rural residents still focuses upon foods, housing and so forth. (3) The widening urban-rural income gap substantially restraints the increase of resident consumption, which is primarily because the increasing urban-rural income gap gives rise to"fraction"phenomenon of urban-rural resident consumption, and eventually suffocates the total number of resident consumption. (4) The consumption of Shaanxi urban residents, to a large extent, exerts a demonstration impact upon the rural residents. It is, therefore, vital that the reasonable consumption behavior in terms of urban residents be beneficial to the healthy development of rural resident consumption.The abovementioned conclusions would provide helpful reference for enacting and evaluating the policies of Shaanxi urban-rural inequality, narrowing urban-rural inequality and consumption gap, boosting the total number of Shaanxi resident consumption, advancing the healthy, stable and sustainable development of Shaanxi economy.