Study On The Influence Of Income Distribution To The Residents Consumption Rate

The long-term sustained and rapid economic growth of China has became "the miracle" and aroused great academic debates since 1978. In recent years , the stability of China's macroeconomic is rising, while the magnitude of the economic fluctuations are becoming smaller and smaller. In the discussion about China's economic growth, the more are showed on the experience of China's economic development and the confidence in China's future economic growth. But every coin has two sides: these achievements are made under the pattern of high rate of investment and low rate of consumption. In the long run, the inappropriate proportion of consumption and investment will decline effective demand, which is not conducive to steady and rapid macroeconomic growth. High rate of investment, coupled with the irrational structure will also lead to other structural problems and make them worse. The financial crisis has weakened oversea demands, thus improve the overall consumption rate is the key to stimulating economic growth.China's income distribution showing great imbalance is already a undisputable fact. This not only displayed in national income distribution pattern, but also showed between urban and rural areas, among regions, among industries and different strata of internal disparity. Although there are different views on the relationship of income distribution and consumption between authoritative scholars, but in explaining China's currently slump on consumption rate, income distribution is undoubtedly an important factor, which is also the starting point of this paper.Based on previous research, this paper attempts to analyze whether the rate of the income distribution has influence on the consumption rate, and if so, what the mechanisms are and to what extent the influence would be. The paper firstly reviews important literatures on the relationships between income distribution and consumption domestic and international, then gives them a briefly command. Secondly, in order to offer readers a vivid and deeper understanding of the relationship between income distribution and consumption , this article describes the current situation of consumption and income distribution both in urban area and rural area in detail . Thirdly, we want to see if the national income distribution pattern has impact on the consumption rate. To achieve this ,we have to modeling the income distribution process, and then analysis their relationship both theoretically and Empirically . The results show that the distribution of national income has a significant impact on consumption. Furthermore, we also want to see if the income distribution among residents has influence on consumption rate .Theoretical and empirical evidence from both urban and rural consistently indicate that consumption rate was significantly affected by income distribution among residents . Finally, this paper puts forward relevant policy suggestions on the shift of social value, the adjustment of income distribution and the reform of financial system.