According to the survey data of CFPS in Peking University from 2010 to 2014, this paper deeply analyzes the regional differences and causes of household consumption smoothing in China. Firstly, based on the risk-sharing model, the appropriate agent variables are selected to measure the ability of consumption smoothing in the eastern, central and western regions, including urban and rural areas. Secondly, the Oaxaca-Blinder decomposition method is adopted from the three angles: family self-sufficiency, social networks and national policies, to find the root source of smooth consumption. The study finds that households in the eastern region own the strongest ability of consumption smoothing, followed by the middle and the weakest in the west, and the urban households also have stronger spending power than the rural households. The main sources of differences in consumption smoothing regions are from the level of household self-sufficiency and national policies, especially the role of household net assets and government subsidies. It also reflects that the government fails to use transfer payments and other means to carry out effective income redistribution, so as to achieve the purpose of narrowing consumption differences between regions. Social networks play a significant positive role in narrowing the regional gap in consumption smoothing. Some other factors such as the level of the head’s education, family size, and regional financial development also affect the ability to smooth. All regions need to focus on the deep-rooted sources of household consumption smoothing, which can effectively increase the potential of local consumption.
Regional Differences in China’s Consumption Smoothing and Its Root Causes：A Comparative Analysis of Families，Communities and Governments
Journal of Finance and Economics Vol. 45, Issue 04, pp. 124 - 139 (2019) DOI:10.16538/j.cnki.jfe.2019.04.010
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Cite this article
Li Li, Li Chunqi. Regional Differences in China’s Consumption Smoothing and Its Root Causes：A Comparative Analysis of Families，Communities and Governments[J]. Journal of Finance and Economics, 2019, 45(4): 124-139.
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