Study On The Relationship Between Livelihood Financial Expenditure And Residents’ Consumption

Since President Hu emphasize accelerating Social Construction to ImprovePeople’s Livelihood in the Report to the17th National Congress of CPC, improvingpeople’s livelihood has become one of the important items in china’s economic worknearly five years. Due to the new situation and new problems emerging in ourlivelihood problems in recent years, public service of livelihood, such as Education,health, Social security and employment, has been playing an important role in theprocess of improving people’s livelihood.This article is based on theoretical study on livelihood fiscal expenditure andconsumption. Firstly, we analyze the current situation of China’s fiscal expenditureand consumption of people. Secondly, we utilize Factor analysis method, by pickingup typical indicator professionally and scientifically, to quantify the effort thatgovernment has made in public service of livelihood recently. Thirdly, we use theTheil index, a statistical index, to measure the public service expenditureEqualization of differences of China’s provinces and three regions. Finally, weintroduce panel model, apply the data of provinces, municipalities and autonomousregions between2005and2010to construct independent variable and dependentvariable, introduce a control variable, and then study the specific effects onresident’s consumption which is made by livelihood fiscal expenditure.Empirical results shows that firstly, the2005-2010, China’s Western region ofthe people’s livelihood public services input had maintained a high level, among12provincial-level administrative districts in the West, around two-thirds of thedistricts were located in the first gradient. The number of the districts shall be six toeight. In the central area the investment of public service of livelihood was muchlower than the Western region and Eastern region, which showed that its investmentwas inadequate. Secondly, in the process of distributing the livelihood financialexpenditure, the Eastern region had the advantage. At the same time, together with the advance of public service equalization, the share of the Western region infinancial expenditure increased gradually and TI contribution rate was enhancedevidently. But the central area’s TI contribution rate was always lower, during this11years, it did not rise substantially. Thirdly, with the increased expenditures oneducation and health, the effect of promoting consumption had appeared. Moreover,the result of promoting overall consumption and urban residents’ consumption wereobvious. At the same time, growth in education spending significantly promoted theconsumption of rural residents, but medical and health expenditure get little successin promoting consumption of rural residents. Although social security expenditurepromoted urban residents’ consumption, the result was not significantly. And itdecreased overall consumption and rural residents’.