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

Kunyuan Qiao

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2013, vol. 8, issue 1, 91-112

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.

Keywords: consumption inequality; income shocks; transmission channels; Unequally Spaced Dynamic Panel Data (USDPD) (search for similar items in EconPapers)
JEL-codes: C1 C5 D1 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:8:y:2013:i:1:p:91-112

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