Income Inequality And Upgrading Of Consumption Structure

In recent years,China has steadily expanded its consumption scale,continuously upgraded its consumption structure,innovated its consumption patterns,and significantly strengthened its traction role in the economic cycle.However,China’s consumption potential is still not fully realized due to the constraints of the income level,income distribution system,social security level,consumption environment,consumption concept and consumption supply.At present,China’s service-based consumption expenditure as a percentage of total consumption per capita is still far lower than that of developed countries with stable consumption structure such as the United States,Japan and the Korea.In the face of the new international pattern,which has not changed in a century and overlapped with the new coronavirus epidemic,further expanding domestic demand to promote consumption growth becomes the key to unblocking the domestic economic cycle and meeting the needs of the people.At the same time,it is an inevitable trend of our country’s development to further optimize the income distribution structure,expand the middle-income group and form an income structure dominated by the middleincome group.Against this background,what impact will income inequality have on the upgrading of the consumption structure? How will the inequality of effort and opportunity after the decomposition of income inequality affect the upgrading of consumption structure? These questions need to be tested empirically.Therefore,based on the family unit,this paper uses theoretical analysis and empirical research to explore the impact of income inequality on the upgrading of consumption structure,and introduces the intermediary variable of social status to explore the impact of income inequality on the upgrading of consumption structure.The contents and conclusions of this study are as follows:(1)Theoretical analysis of the upgrading structure of consumption structure by income inequality.At first,this paper makes a systematic summary of the domestic and foreign literature,and solves the basic problems of how to measure the upgrading of consumption structure and how to measure income inequality.Then,combining basic consumption function theory to analyze the influence and mechanism of income inequality on the consumption structure upgrade.According to previous research and basic theory,income inequality may promote the consumption structure upgrade or inhibit the consumption structure upgrade.Different scholars have come to the opposite conclusion,which may be related to the income inequality structure,which can be divided into effort inequality and opportunity inequality.At the same time,rising income inequality affects how individuals value their social status,and the pursuit of higher status is one of the main reasons people make consumption decisions.Therefore,income inequality not only influences the upgrading of consumption structure,but also influences the upgrading of consumption structure through the psychological factor of social status.(2)Empirical analysis of income inequality on the upgrading of consumption structure.Based on CFPS microdata from 2012-2018,we selected the structural upgrading of consumption as the explanatory variable and income inequality at the provincial level as the core explanatory variable.With the relevant variables under control,empirical analysis using the panel fixed-effect model demonstrated that income inequality inhibits structural upgrading of consumption escalation by 0.014 for every unit decrease in the structural upgrading of consumption.Then we tested the endogeneity of the model by using two-stage OLS model,and confirmed the reliability of the results by replacing the interpreted variable and replacing the interpreted variable.In the end,using the idea of Jiangting(2022)to examine the mechanism of social status as an intermediary variable,the results show that income inequality has a significant inhibitory effect on social status and thus inhibits the upgrading of consumption structure.(3)Empirical analysis of unequal opportunities and unequal efforts to upgrade consumption structures.Based on CGSS data from 2011 to 2017,this paper breaks down income inequality using the Parameter Method,which uses Heckman’s method to avoid sample selection bias,by setting environmental variables as parents’ political profile,administrative rank of parents,parental employment status,occupational category,parental education level,gender,age,ethnicity,household status,and province of origin.Then we use inequality of effort and inequality of opportunity as the core explanatory variables of empirical analysis.We found a positive,but not significant,regression factor for structural upgrading of consumption due to effort inequality.The presence of opportunity inequality significantly inhibited structural upgrading of consumption.On average,an increase in opportunity inequality reduced structural upgrading of consumption by 0.291 units,while an increase in effort inequality increased structural upgrading of consumption by 0.101 units.(4)Taking into account the differences in consumption strategies of our country’s social resources and households according to different income levels,the dual structure of China’s urban and rural economy and the average consumption tendency of different residents,we divided the sample into groups and found that in most cases,the effect of effort inequality on consumption structure upgrading was significantly positive and the effect of opportunity inequality on consumption structure upgrading was significantly negative,further confirming our hypothesis that opportunity inequality and effort inequality have heterogeneity.Finally,the robustness and endogenous nature of the model are also discussed,and the mediating effect model is used to confirm that inequality of opportunity has a significant inhibitory effect on social status,thus inhibiting the escalation of consumption structure.