Study On The Consumption Difference Between Chinese Urban Residents And The Reason Of This Difference

Due to the effect of European crisis of foreign debts and American financial crisis the current economic situation is a little bit cloudy, so for China a high external dependence degree country, changing the way of economic development and stimulating domestic demand are the essential and long-standing factors underlying Chinese economic growth. The party and government has adopted a series of favorable measures to stimulate household consumption, for example the central budget will allocate265billion to support the consumption of energy-saving household electrical appliances since June1st,2012. With the continuous improvement of the consumption level, the problem about consumption difference is particularly prominent. Chinese inhabitants consuming lay-off has showed the significant difference between31provinces and each group about urban residents currently. The significant difference will deeply affect men’s happiness, increase the sense of inequity in lower consumer groups, and go against constructing harmonious society of socialism. Therefore, the study of the consumption differences and their causes, has a certain theoretical and practical significance to stimulate domestic demand and promote the healthy and harmonious development of economic.This article will focus on solving the following problems:(1) Since2000how is the consumption level difference between China’s urban residents and how is the difference in consumer behavior?(2) What leads the remarkable difference between31provinces and each group about urban residents exactly? This paper is organized as follows.1.The first chapter is a introduction, showing the background and significance, reviewing previous research and pointing out the innovation of this paper.2.The second chapter centers on the consumption function and research method, and introduce precautionary savings theory based on the habit formation and the method of dynamic quantile regression for panel data mainly.3.In the third chapter, using the descriptive statistical method the paper analyzes the evolution path on consumption difference and the difference about the consumption growth since the beginning of the new century. Results show that the difference between31provinces and each group about urban residents is notable and there has been an obvious phenomenon that the more backward area of economic development, the bigger the consumption gap between urban residents.4.The fourth chapter mainly analyzes the heterogeneity consumer behaviour of urban residents in China. Firstly, this chapter uses the panel data identification method testing whether it has variable intercepts or variable coefficients to divide the31provinces into five areas in order to sure that the panel data model in each region has variable intercepts with non-varying coefficient and then analyzes the heterogeneity of consumer behavior of urban residents in China by the method of dynamic quantile regression for panel data.Through the empirical analysis we draw the following conclusions:(1) The panel data identification method has some advantages to divide regions;(2) There has a demonstration effect in Chinese consumption behavior of regional heterogeneity between each region and each group currently.5.In the fifth chapter, the article focuses on studying the reason leading the significant consumption difference. Firstly, using counterfactual analysis to construct the counterfactual consumption growth rate of the level of social development, infrastructure, government behavior, consumption habit and foreign trade, it measures and analyzes the contribution to consumption gap of urban residents in different provinces. And then we measure and analyze the contribution to the internal consumption gap of urban residents by constructing counterfactual consumption growth rate of each consumption expenditure.Our main conclusions are as fellows:(1) regional economic disparity and income gap are the main reasons for the increasing gap, and infrastructure, external dependence and local budget expenditure can narrow the consumption gap;(2) households living consumption and health care consumption are the main reasons for the increasing gap,and transportation and communication consumption, education and cultural entertainment consumption can narrow the consumption gap.6.The last chapter introduces the conclusions, policy suggestions and prospect of further study.