The Influence Of Income Inequality On Zhejiang Rural Household Consumption

The article is under the background of downturn consumption widening income inequality.According to the empirical data of Zhejiang rural fixed observation points during2004 to 2012, using the theory of relative income,we examined the effect of income inequality total consumption and four different types,come to the conclusion:we could conclude that the income inequality has a significant impact on rural households’ expenditure,even after controlling the household net income.Specifically, when gini fell 0.1,the expenditure of rural household increased by 6.36%,and the APC increased by10.5%.Also we found that the impact of income inequality on the middle income households and the low income households is obviously higher than high income households,but the impact of income inequality on expenditure,to the old families and young families has no significant difference.We also could conclude that the income inequality has a significant impact on rural households’ expenditure,even after controlling the household net income.Specifically, when gini fell 0.1,the food expenditure of rural household increased by 3.75%,clothing expenditure of rural household increased by 10.58%,service expenditure of rural household increased by23.69%. At the same time,we also found that the impact of income inequality on service and food expenditure, to the low income households,middle income households and high income households,has no significant difference.But the impact of income gap on old families is obviously higher than young families.To the clothing consumption,there’s no significant different effect on different income group,but the impact of income inequality on the age of55-65 is obviously higher than other ages.Through the analysis of the literature,we found that the interests brought by high status will stimulate people pursuit social status by choosing appropriate methods.And the change of the income inequality strengthen the desire of pursuing social status.The expansion of income gap will encourage people reducing consumption and increasing savings to improve the social status.The narrowing of the income gap will inspire people saving less and consuming more,to show status so that they can separate from the low class or maintain some kind of relationship,lead a promotion of the position of society.