Chen, Binkai; Lu, Ming; Zhong, Ninghua
In: Global COE Hi-Stat Discussion Paper Series, February 2012
Abstract
This paper provides a new explanation for China’s extremely low consumption-to-GDP
ratio, highlighting the constraints of the “household registration system” (Hukou) on
China’s household consumption. Our baseline results show that the consumption of
migrants without an urban Hukou is 30.7% lower than that of urban residents. Moreover,
consumption heterogeneity cannot be explained by migration effects, culture, social norms,
habits or some other forms of household heterogeneity. Further studies on the composition
of household consumption have shown that the gaps are largest in areas such as education
and culture, durable goods and health. As both the number and income level of migrants
are rising, the constraining effects of Hukou on household consumption will continue to
increase.
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