The Influence Of Livelihood Expenditure On Household Consumption

Consumption, investment and net exports are known to be the three carriages which driving economic growth. Investment demand is a kind of induced demand of consumption, which is restricted by consumption demand; net exports which are determined by exports and imports are easily affected by the external environment; in this sense, the increase of consumption demand is the original of economic growth. However, while the economic achievement is great, the economic growth is mostly owed to the rapid growth of investment and net exports, consumption demand, especially household consumption is very weak. The weak household consumption has led to the unbalanced of macro economic structure, and hindering the continuous stable and healthy development of the national economy.Meanwhile, for a long time, we take economic construction as the central task, and fiscal expenditure were concentrated on the aspect of Economic development, in some sense, it was right and necessary, which made the great achievement of economic. However the overemphasis on GDP has greatly decreased the fiscal expenditure on people’s livelihood, which resulted in a lot of livelihood issues. In the1990s, with the promotion of the market economy reform, the traditional social security system collapsed step by step, but the supporting reforms are lagged obviously, which make the large nonflexible expenditure on education, medicine, house and pension increased greatly, that make the livelihood issues more serious.In this context, the paper tries to mathematically and theoretically analyze the influence of livelihood expenditure on household consumption, and empirically verify it from the aspect of improving people’s livelihood and promoting the consumption. Firstly, we tries to deduce the residents’ consumption function from the residents’ behavior characteristics, and explain the crowding-in effect of livelihood expenditure on household consumption. Secondly, we expatiate that livelihood expenditure can increase people’s disposable income with effect, which promotes the household consumption in turn. Finally, based on the explanation of the status of livelihood expenditure and household consumption, choosing the data of2007-2012of31provinces and autonomous regions, the paper empirically verifies the influence of livelihood expenditure on household consumption from the summation aspect and the structure aspect, and explains the differences between urban and rural.After empirically analysis, we can get:(1) The livelihood expenditure has no obvious influence on household consumption; different items of livelihood expenditure have different influence on household consumption, the expenditure on education has no obvious influence on household consumption, the expenditure on social security and employment has a crowding-out effect, but the expenditure on health and medicine has a crowding-in effect.(2) The livelihood expenditure has a different influence on household consumption between urban and rural. In urban, the livelihood expenditure has no obvious influence on household consumption; while it has a crowding-in effect in rural.(3)Different items of livelihood expenditure have different influence on household consumption between urban and rural. The expenditure on education has no obvious influence on household consumption in urban, but it has a crowding-in effect in rural. In urban and rural, the expenditure on social security and employment has no obvious influence on household consumption. The expenditure on health and medicine has a crowding-in effect on household consumption in urban and in rural, and the crowding effect has no huge differences.Finally, based on the above empirical analysis, this paper proposes policy recommendations from optimizing the fiscal expenditure structure, improving the input mechanism of expenditure on education, social security and employment, healthy and medicine, in order to achieve the goal of improving people’s livelihood and promoting consumption.