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Consumption Inequality in China: Theory and Evidence from the China Health and Nutrition Survey

Author

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  • Kunyuan Qiao

    (Department of Applied Economics, Guanghua School of Management, Peking University, Beijing 100871, China)

Abstract

We investigate consumption inequality in China both theoretically by constructing a theoretical model that delineates the transmission channels by which income shocks affect consumption and empirically through an Unequally Spaced Dynamic Panel Data model estimation. We find that China is experiencing consumption inequality with the full partial insurance of consumption against both permanent and transitory income shocks, although the impact of both types of shock are larger than the case of the United States. The results are due to precautionary savings motives of the Chinese. We further document how income becomes more dispersed in China and show how the family background of a child affects his outcome to a large extent. Policy implications based on our findings are proposed.

Suggested Citation

  • Kunyuan Qiao, 2013. "Consumption Inequality in China: Theory and Evidence from the China Health and Nutrition Survey," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 8(1), pages 91-112, March.
    • Handle: RePEc:fec:journl:v:8:y:2013:i:1:p:91-112
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-002-013-0005-1
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    Citations

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    Cited by:

    1. Qingjie Xia & Shi Li & Lina Song, 2017. "Urban Consumption Inequality in China, 1995–2013," Working Papers id:12239, eSocialSciences.
    2. Xia, Qingjie & Li, Shi & Song, Lina, 2017. "Urban Consumption Inequality in China, 1995–2013," IZA Discussion Papers 11150, Institute of Labor Economics (IZA).
    3. Qingjie Xia & Shi Li & Lina Song, 2017. "Consumption Inequality in Urban China, 1995-2013," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 201719, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).

    More about this item

    Keywords

    consumption inequality; income shocks; transmission channels; Unequally Spaced Dynamic Panel Data (USDPD);
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D1 - Microeconomics - - Household Behavior

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