Expenditure elasticity and consumption inequality in rural China

ABSTRACT

Consumption inequality is a matter of great concern. However, measurement error always appears when doing so. To handle this, this paper uses a method based on Engel expenditure elasticity proposed by Aguiar and Bils. The results show that consumption inequality in rural China based on Engel expenditure elasticity is smaller than the income inequality and consumption inequality calculated by the ratio of high-income to low-income households.

KEYWORDS:

• Expenditure elasticity
• consumption inequality
• measurement error
• Engel curve

JEL CLASSIFICATION:

• D12
• E21
• O18

Acknowledgment

We would like to thank Xi Zhu and the anonymous reviewers for constructive comments.

Disclosure statement

The authors declare no conflict of interest.

Notes

¹ In 2005, the central government allocated one trillion yuan to subsidize local governments. https://news.sina.com.cn/c/2006-03-07/11108382003s.shtml..

² NDRC: The central government’s transfer payments show a preference for the central and western regions. https://www.chinanews.com.cn/cj/hgjj/news/2008/03-03/1179939.shtml..

³ China’s economic investment will focus on the west.http://www.ocn.com.cn/info/201308/jingji245210954.shtml.

Additional information

Funding

The authors acknowledge the support of grants from the National Social Science Fund of China [project code 21&ZD077], National Natural Science Foundation of China [project code 71973094, 72173085, and 71833003], Young and Middle-aged Teachers’ Education and Research Project of Fujian Province [project code JAS21055], and Open Fund Project of Rural Vitalization Research Institute of Fujian Agriculture and Forestry University [project code XCZX2022A09].