Measurement And Analysis Of The Causes Of Residents’ Income Uncertainty In China

Since reform and opening-up, China’s economic system transform from the traditional planned economic system to socialist market economic system profoundly. During the period, a special phenomenon has happened in China’s economy that income and savings are rising at high speed, when consumption is reducing. Many scholars believe that income uncertainty is the main cause of this special phenomenon. There are many uncertain factors in the process of reform, such as the uncertainty of system, the uncertainty of the market and the uncertainty caused by the limited rationality of the economic individuals. And the impact to residents created by these uncertainties will be transformed into residents’ income uncertainty finally. In the background, this paper analyzes the measurement and causes of the residents’ income uncertainty.Firstly, this paper summarizes the method of measuring uncertainty, comparing the advantages and disadvantages of various methods, and selects the adjusted rate to measure the urban and rural residents’income uncertainty. The conclusion is that urban and rural residents’income uncertainty is decreasing, but it shows large fluctuations in80s and90s of20th century the larger fluctuations. Secondly, this paper analyzes from three aspects of the uncertainty of income of urban and rural residents in China:(1) urban and rural residents the actual income growth volatility;(2) changes in the temporary income of urban and rural residents;(3) the changes of residents’ income gap. Thirdly, with qualitative description of the influence factors of urban and rural residents’ income uncertainty, the results show that the main factors affecting the urban residents’ income uncertainty are the source of income diversification, the level of economic development, employment status and national policy support. And the factors influencing farmers’ income uncertainty mainly include the change of farmers’ income structure, the natural risk of agriculture and agricultural products market risk and the uncertainty of the system. Fourthly, using the state space model for the1984-2012national time-series data to carry on the empirical analysis the influence factors on the impact of income uncertainty, the study found that:(1) for urban residents, level of economic development, national policy support, employment, income diversification affect the income uncertainty mainly concentrated in the1990s, at present the influence of these factors on the income uncertainty tend to smooth;(2) for rural residents, the main factors affecting the income uncertainty are the market risk, income structure change and national economic policy, among then the effect of market risk is the most prominent. These factors impact on the income uncertainty tends to smooth. Finally, this article puts forward policy suggestions on how to reduce the urban and rural residents’income uncertainty:(1) improve the stability of the residents’income to ensure the steady growth of income;(2) the government should increase urban and rural fixed assets investment, especially in increasing the proportion of rural fixed assets investment and perfecting rural infrastructure;(3) developing and standardizing wholesale market and futures market about the agricultural products to reduces the market risk.