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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front Econ Chin    2013, Vol. 8 Issue (1) : 91-112    https://doi.org/10.3868/s060-002-013-0005-1
research-article |
Consumption Inequality in China: Theory and Evidence from the China Health and Nutrition Survey
Kunyuan Qiao()
Department of Applied Economics, Guanghua School of Management, Peking University, Beijing 100871, China
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Abstract

We investigate consumption inequality in China both theoretically by constructing a theoretical model that delineates the transmission channels by which income shocks affect consumption and empirically through an Unequally Spaced Dynamic Panel Data model estimation. We find that China is experiencing consumption inequality with the full partial insurance of consumption against both permanent and transitory income shocks, although the impact of both types of shock are larger than the case of the United States. The results are due to precautionary savings motives of the Chinese. We further document how income becomes more dispersed in China and show how the family background of a child affects his outcome to a large extent. Policy implications based on our findings are proposed.

Keywords consumption inequality      income shocks      transmission channels      Unequally Spaced Dynamic Panel Data (USDPD)     
Corresponding Authors: Kunyuan Qiao,Email:jasonkqiao@126.com   
Issue Date: 05 March 2013
 Cite this article:   
Kunyuan Qiao. Consumption Inequality in China: Theory and Evidence from the China Health and Nutrition Survey[J]. Front Econ Chin, 2013, 8(1): 91-112.
 URL:  
http://academic.hep.com.cn/fec/EN/10.3868/s060-002-013-0005-1
http://academic.hep.com.cn/fec/EN/Y2013/V8/I1/91
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