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Urban household consumption in China: Price, income, and demographic effects
Author(s) -
Cao Jing,
Ho Mun Sing,
Hu Wenhao,
Jorgenson Dale
Publication year - 2021
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12728
Subject(s) - economics , consumption (sociology) , income elasticity of demand , china , renting , restructuring , price elasticity of demand , labour economics , autonomous consumption , consumption function , household income , demographic economics , agricultural economics , public economics , microeconomics , production (economics) , aggregate expenditure , geography , social science , archaeology , sociology , finance , political science , law
Given the government’s goals to restructure the economy away from investment and exports to consumption and to reduce inequality, it is important to have a good understanding of China’s household consumption behavior and to obtain a good measure of consumption adjusted for price differences across regions. We estimate a consumption function that is flexible and distinguishes between different household types such as size and age of head. We develop detailed price data by region, including rental equivalents for owner‐occupied housing. This provides us the estimates of income and price elasticities of different consumption bundles that should be useful for analyzing public policies. We find distinct elasticities for residents of large and small cities. For all urban households the income elasticity for food is about 0.7–0.8, housing is 0.8–0.9, and services is 1.4–1.5. The price elasticity for food and services is about 0.5 and 0.8, respectively.