The Research On The Influence Of Chinese Social Security Expenditure On Household Consumption

Consumption provides power for production and is the ultimate goal of production.At the same time,it represents the people’s longing for a better life.Moreover,consumption has become the "main engine" of China’s economic growth,contributing 57.8 percent to the economy in 2019.The absolute income hypothesis,life cycle hypothesis and permanent income hypothesis hold that it is the income level of residents that determines and affects consumption,and income is affected by various factors,such as epidemic shock,unemployment shock,disaster shock,disease shock and so on.Therefore,consumption may be affected by factors such as epidemics,unemployment,natural disasters,and diseases,and there will be inevitable fluctuations.Social security,as a stabilizer for socio-economic development,plays an important role in resisting income fluctuations and responding to various adverse shocks.First,medical insurance can deal with residents’ disease risks and share medical expenses to the state and society,thus stabilizing residents’ income and increasing consumption.Second,the unemployment insurance can eliminate the unemployment anxiety of employees,provide the living security for the unemployed,reduce the savings to cope with the future income uncertainty,and thus increase consumption.Third,the endowment insurance provides old-age pension for residents’ old age life,guarantees the income stability of their old age life,and then plays the role of increasing current consumption.The core of this paper is the impact of social security expenditure on Household consumption.First,this article summarizes the theoretical literature at home and abroad,and finds that the absolute income hypothesis,life cycle hypothesis,and permanent income hypothesis provide a theoretical basis for the study of the impact of social security on consumption: social security can affect consumer spending by affecting income levels.Secondly,this paper summarizes the empirical research literature on the impact of social security on consumption from the perspective of empirical research,and finds that different measurement methods and different types of data will lead to different research results.Finally,considering the dynamic characteristics of the impact of social security on consumption,this paper uses the time series VAR model and panel VAR model to estimate the contribution of social security to household consumption.The paper uses China’s 2007-2018 social security expenditure,interest rate,GDP,consumer price index,investment and household consumption quarterly data to establish a time series VAR model to study the impact of social security on household consumption.The study found that social security expenditure has a significant positive impact on household consumption expenditure after the first quarter to six quarters,and an increase of one standard deviation in social security expenditure will lead to a cumulative increase of 2.7standard deviation in consumption expenditure within six quarters.This is equivalent to a10% increase in social security expenditure,which will increase household consumption by4.5%.The paper uses the provincial panel data of China ’s social security expenditure log,residents ’consumption log,investment log,employment log,and GDP log to establish a PVAR model from 2006 to 2016 to study the influence of the social security on household consumption.The study found that after the first period,social security expenditure has a significant positive influence on consumption.After calculation,an increase of one standard deviation in social security expenditure will lead to a cumulative increase of 0.23 standard deviation in consumption expenditure in the five period.This is equivalent to a 10% increase in social security expenditure,which will increase household consumption by 0.46%.Therefore,according to the estimation results of the VAR model,social security expenditure has a positive role in promoting consumption.Under the current severe epidemic situation,economic downturn,unemployment risk and other shock conditions,the important role of social security in stabilizing consumption and promoting consumption should be brought into full play.To this end,I propose the following policy recommendations: Change the concept of excessively frugal consumption and guide residents to consume;Accelerate the establishment of a multi-level social security system from multiple perspectives;Formulate a scientific and reasonable social security system design.