The Impact On Urban Household Comsumption Of Social Security

From 1990, it is an undoubted fact that the consumption tendency of Chinese urban households is declining and the saving rate is continuously increasing.Chinese household saving is to a large extent influenced by many uncertain factors, such as the future pension benefits,health and education costs, improving the social security system can reduce these uncertainties, thereby promoting household consumption.The impact of Social Security on consumption and saving has been attracting much attention of economists in other countries,the developments of consumption theory and empirical approaches have been induced the subsequent numerous studies. There is always a dispute on the relation between social security and household consumption since extended life-cycle model was presented in the pioneering paper by Feldstein, many other theories were proposed to analyze the reaction of consumer behavior to social security, such as precautionary saving,bequest motives,liquidity constraints,the excess sensitivity of consumption,limited rationality,rules of thumb and so on. This paper reviews some empirical studies on relation between social security and household consumption, and the analysis of models mainly based on macro data,household data and simulation data.But compared with other countries, Chinese social security system has its own features, which effects on consumption is not sure to be consistent with Western research findings. The paper aims to study weather the retirement consumption puzzle is observed in China and the impact of Social Security on the consumption of Chinese urban household theoretically and empirically. Using survey data of The China Health and Retirement Longitudinal Study (CHARLS) in 2008, this paper investigates what is influencing factors of household consumption, and the focus is to investigate the effects of social security to household consumption expenditures. According to whether the householder is retired, the object sample was divided into two group to separately study their consumption effect factors. The empirical outcomes exhibit that the types and levels of security to some extent affect household consumption, but the influence of social security and other influencing factors are different to consumption of different kind of families. The outcomes also shows some factors such as life cycle stages,household assets,house value have significant effects on food consumption and daily consumption to the families whose householder are working, and the effects are insignificant to the families whose householder are retiree.