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Evolution Trend and Regional Difference of Chinese Urban Household Consumption Inequality

【Authors】
ZHOU Longfei, ZHANG Jun
【WorkUnit】
Fudan University, 200433.
【Abstract】

Inequality mainly includes income inequality and consumption inequality. Compared with the former, consumption inequality deserves more attention in many aspects. This paper tries to measure Chinese urban household consumption inequality using the number of different types of durables owned by the households and the finite mixture model. This method can endogenously classify the surveyed households into different consumption classes and estimate the portion of different consumption classes as well as their characteristic parameters. It can also help to infer the conditional probability of each household to fall into a certain consumption class. Using the data of the Urban Household Survey from 1993 to 2012, this paper analyzes the evolution trend and regional difference of Chinese urban household consumption inequality. Below are the main conclusions. (1) The trend of Chinese urban household consumption inequality had three-stage characteristics and the portion of the lower consumption class continuously declined from 1999. (2) The consumption level of all consumption classes increased all the time during the comparable periods, but that of the higher consumption class outgrew that of the lower consumption class until 2001. (3) In any year, it was almost the case that East China had the highest consumption inequality, followed by Central China and then West China, but the portion of the lower consumption class in East China was almost always the lowest. (4) The consumption level of the higher and lower consumption classes in all regions almost increased during the comparable periods, but their growth margin varied from year to year and from region to region. Especially from 2007, the consumption level of lower consumption classes in Central and West China became higher than that in East China.

JEL:D63, P36

【KeyWords】
Consumption Inequality, Finite Mixture Model, Evolution Trend, Regional Difference