The Impact Of The Dependency Ratio On Rural Household Consumption

At present, China’s economy is faced with the situation of insufficient domestic demand and lower consumption ratio. The low household consumption rate will affect the normal operation of the national economy. Over the long term, it will have bad influence on the development of economy. So this paper starts with expanding the rural residents’ consumption level, then we analyse the rural residents’ consumption from the perspective of population age structure. The residents’ consumption includes urban residents’ consumption and rural residents’ consumption. The data from all provinces indicates that the urban residents’ consumption level is generally higher than rural residents, about 2.5 times the level of consumption of rural residents. We can tell from the statistics that the latent capacity of rural residents’ consumption is relatively large. Firstly, we review the development of household consumption rate and dependency ratio. Then we elaborate the related theory about consumption. After that, we adapt child dependency ratio and elderly dependency ratio as index to measure population age structure. Based on the research of rural residents’ consumption structure, we also use theoretical model and empirical model to study it. From the theoretical model, we get the result that those two indexes have uncertain impact on the consumption level of rural residents. But from the empirical analysis, we know that there is a significant positive correlation between the child dependency ratio and the consumption of rural residents, which support The Life-Cycle Theory. In the meantime, elderly dependency ratio has no significant impact on rural residents’ consumption. With these results, we make some policy commendations.