Study On The Influence Of Income Gap On Consumption Upgrading Of Urban Households

Current economic development and the increase of resident income in China gradually affect the consumption concept of households.Since the concept of consumption structure was put forward,China's consumption gradually embodies following structural transformation characteristic: the service-type hedonic consumption has gradually replaced subsistence consumption as the mainstream.Income gap is one of the main factors affecting residents' consumption behavior.This paper explores the effect of income inequality on household consumption structure and consumption upgrade,based on China Labor Force Dynamic Survey in 2012,2014 and 2016.Firstly,the income and consumption distribution functions of urban household samples in 2012,2014 and 2016 are fitted to help us understand the changes in the income and consumption of urban household during past few years.In the following empirical studies,it is concluded that the families in low income group,lower middle-income group,middle income group and highincome group have the largest average consumption tendency for medical treatment,survival,development and enjoyment consumption respectively.With the increase of household income,the consumption potential of residents is gradually released and the consumption level is gradually rising.Then,the marginal consumption tendencies of urban households with different income groups at different subpoints of subsistence,hedonic and developmental consumption are obtained by establishing quantile regression models.In order to avoid the limitation of artificial income group division and focus on the data itself more objectively,we regard the logarithm of household disposable income as the threshold variable,establish threshold regression models to divide these household samples with different incomes more objectively,and further explore the non-linear characteristics of the impact of income on consumption.In addition,income gap has different nonlinear effects on different types of household consumption.Except a few extremely high-income families,the effect of income gap on consumption upgrading coefficient is reflected in a gentle asymmetric inverted U-shape as a whole.For the two major special consumption items—health care and education,income gap has no significant non-linear effect on medical expenditure,but significant effect on education expenditure.In short,excessive income gap is not conducive to the upgrading of household consumption structure with limited social resources and wealth.Raising the income of low-consumption groups to narrow the wealth gap among individuals and families is the fundamental way to improve their living quality and upgrade the social consumption structure.