The Effects Of Income Inequality On Household Consumption Based On Zenga Index

The General Office of the State Council issued the "Opinions on Further Releasing Consumption Potential to Promote sustainable Recovery of Consumption" on April 25,2022.Consumption is crucial in the process of dredging the great domestic cycle.In the 14 th Five-Year Plan,it is also clearly stated that improving the income distribution pattern is the key way to promote the expansion of domestic consumption,and the key to give full play to the role of household consumption upgrading in enabling the new double-cycle pattern lies in the distribution pattern based on fairness and efficiency,optimizing the consumption structure and releasing the potential of domestic demand,so as to further unblock the domestic great cycle.Therefore,the study of the impact of income inequality on household consumption scale and consumption structure in this context has important theoretical and practical significance for the construction of a new dual-cycle development pattern.Based on the panel data of CFPS in 2014,2016 and 2018,this thesis uses Zenga index to measure,decompose and analyze the inequality of household income in China,and explores its influence on the total per capita consumption and structure of household before and after the inequality decomposition.Firstly,Cite Space knowledge graph software is used to study the clustering and emergence analysis of the literature related to "income inequality" and "consumption".Secondly,Kernel density estimation is used to measure the dynamic change of residents’ income distribution.Third,by using the unique strong decomposition of Zenga index,the family gross income inequality is decomposed by subgroup,subfactor and joint decomposition,so as to study the composition of intra-group and inter-group inequality in urban and rural areas under different income sources and its contribution to total inequality.Then,combined with the data of CFPS database in 2014,2016 and 2018,Explore the dynamic change process of resident income inequality structure;In addition,based on the conclusion that wage inequality and transfer income inequality are the main sources of resident gross income inequality obtained by decomposition,gross income inequality,wage income inequality and transfer income inequality are respectively taken as core explanatory variables.The fixed-effect model and one-step system GMM model are established to explore the influence of income inequality on the total consumption and consumption structure of residents before and after decomposition.Finally,quantile regression is used to analyze the differentiated impact of income inequality on total consumption and consumption structure among people with different consumption levels.This thesis concludes that:(1)the income gap between urban and rural areas is obvious,and the degree of inequality within cities is large.Wage and transfer income inequality is the main source of total income inequality;(2)The degree of transfer income inequality within rural areas is low,while the degree of wage income and transfer income inequality within urban areas is high;(3)The change trend of transfer income and wage income inequality is opposite;(4)Gross income inequality and wage income inequality have a significant inhibitory effect on all types of consumption,while gross income inequality has a promoting effect on the total consumption of high consumption groups;(5)Transferable income inequality can promote different types of consumption,but has differences in group structure.Based on the empirical results,this thesis puts forward the following policy recommendations:(1)steadily increase the wage level of the rural and urban low-income groups;(2)effectively increase the transfer income of rural areas;(3)Focus on improving the level of rural non-transfer income;(4)Continue to promote a new type of urbanization,encourage mass entrepreneurship,meet people’s needs for a better life,unleash consumption potential,and promote consumption upgrading.