Research Of The Impacts The Social Insurance Has On The Urban Residents' Consumption In Henan

Three factors namely, Investment, export and consumption are driving economic growth. In recent years, China's economy attaches more importance on export and investment than consumption. However, the economic crisis in 2008 put our export oriented economy at risks. Since then, China attached great importance to the consumption and set the internal economic growth as the main drive for promoting consumption as Chinese people are the basis for the economy. Household consumption is influenced by many factors, including income, price, consumer expectations, social security, etc. As Chinese population is aging rapidly, social security, the main factor affecting residents' consumption and ensuring the people's living standards, has attracted more attention and become the focus of more researchers. The social security system is vital to the national interest and people's livelihood, which is beneficial to the improvement of people's living standard. Social insurance is the core content of social security.The researches find that the transformation of China's social security system in 1990 s had significant impact on the residents' consumption and the imperfect social security system restricted residents' consumption level. The study is based on these researches. The author selects the social insurance as the object and employs normative analysis, empirical analysis and comparative analysis to research what impact the social insurance has exerted on urban residents consumption. However, the researches currently on this issue are mostly the macroscopic studies on the national situation, which neglect China's grand territorial scope and the huge social and economic development gap among the country. So this study focuses the research in Henan province, a comparatively small research scope. Henan is a major agricultural province with a large population, featuring rapid economic growth but low levels of economic development. It is a typical representative of the underdeveloped in the central areas. Other similar provinces can draw lessons from the research of municipalities in Henan province.After reviewing the relevant literature at home and abroad, the author finds that literature research mainly can be divided into two topics: either the social insurance promoting residents' consumption or restraining residents' consumption. According to statistics shown in the table(by comparison), it shows the residents' status quo and existing problems in Henan, the current development of social insurance, the functional mechanism of social security expenditures on urban residents.In the empirical analysis part, the empirical analysis of this study is based on the classic life cycle model of 2005-2014 panel data from 18 cities. Following the steps of the unit root test, the cointegration test and the regression model selection, it is concluded that the social insurance in Henan inhibits the urban residents' consumption in short term. Given the residents' consumption and the development of the social insurance in Henan province, the study argues that the main reasons are that the development of social insurance unmatches Henan's current economic strength, the social insurance system in Henan province is imperfect, the operation of social security system is low-efficient and lacks corresponding rules and regulations. Therefore the author puts forward corresponding policies and recommendations based on the above analysis which are speeding up the economic system reform, perfecting the income distribution system, creating more income for consumption; perfecting the system of fiscal expenditure, increasing budget on social security with the government's support, ensuring the continuity of fiscal policy implementation; perfecting the internal social insurance system such as continuing to expand coverage for social security, formulating corresponding laws and regulations, vigorously promoting social security undertakings, encouraging the participation of individuals, coordinating the relationship among the government, enterprise and individuals, improving the old consumption concept, encouraging new patterns of consumption and advocating the appropriate pre-expenditure of credit card.The study demonstrates that the impacts of the social insurance on urban residents' consumption in Henan from both the theoretical and empirical aspects, puts forward the concrete policy suggestions, and provides advice for the development of social security of Henan province, to contribute, eventually pushing residents' consumption in Henan province in order to promote the rapid growth of the economy of Henan province.