Government debt and household wealth inequality: evidence from China

Figures & data

Table 1. The symbol and definition of the variables.

Variable	Variable symbol	Definition
Dependent variable
Top 20% household wealth share (Ratio)	Wealth_top20	The ratio of the highest group to the overall wealth
Wealth Gini Coefficient (Ratio)	Wealth_gini	The difference between the ratio of the highest group and the lowest group to the overall wealth
Independent variable
Government Debt Ratio (Ratio)	Gebt_gdp	The ratio of government debt to GDP
Control variable
Economic Development Level	Ingdp	The natural logarithm of GDP
Financial development Level (Ratio)	Finance_gdp	The ratio of deposits and loans to GDP
Unemployment rate (Ratio)	Unemploy_rate	The ratio of unemployed labor force to total labour force
Fiscal deficit ratio (Ratio)	Deficit_gdp	The ratio of deficit to GDP
Mechanism variable
Bank loan (log)	Loan	Bank loans obtained by households
Household wealth (log)	Wealth	Total household wealth
Real Estate (Dummy)	Real Estate	Whether the household own house
Purchase Demand (Dummy)	Purchase Demand	Whether the household has the desire to purchase a house
Share of Real Estate (Ratio)	House Share	The ratio of house value to total wealth
Edu	Edu	Years of education (Head of household)
Age	Age	Age (Head of household)
Marriage (Dummy)	Marriage	Married or not (Head of household)
Health (Dummy)	Health	Health Level (Head of household)

Source: Authors Calculation.

Table 2. Data statistics.

Variable	Mean	Std.	25% quantile	Median	75% quantile
Wealth_top20	0.626	0.083	0.574	0.622	0.680
Wealth_gini	0.619	0.091	0.564	0.613	0.678
Gebt_gdp	0.087	0.049	0.052	0.079	0.110
Ingdp	9.899	0.783	9.477	9.945	10.359
Finance_gdp	0.032	0.031	0.018	0.026	0.035
Unemploy_rate	3.373	0.575	3.100	3.400	3.700
Deficit_gdp	0.111	0.102	0.049	0.075	0.123

Source: Authors Calculation.

Table 3. Household sub-wealth status (Unit: million yuan).

	10%	25%	50%	75%	90%	Mean
Production and operation	0.05	0.14	0.58	4.00	20.15	15.52
Real estate	0.00	3.01	26.04	87.08	240.00	92.46
Vehicles	1.00	3.00	7.00	13.50	24.00	10.78
Financial assets	0.05	0.21	1.30	7.00	24.00	9.18
Other assets	0.05	0.27	1.00	2.00	5.00	1.89
(Other liabilities)	(0.27)	(0.80)	(2.00)	(5.00)	(11.00)	(5.05)

Source: Authors Calculation.

Table 4. Relationship between government debt and household wealth inequality.

Variable	Wealth_top20				Wealth_gini
	FE	FE	RE +  Clustering	RE +  Jackknife	FE	FE	RE +  Clustering	RE +  Jackknife
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Gebt_gdp	0.282** (0.127)	0.305** (0.134)	0.429*** (0.117)	0.429*** (0.103)	0.322** (0.137)	0.350** (0.141)	0.490*** (0.126)	0.490*** (0.110)
Ingdp		−0.181 (0.233)	0.034 (0.109)	0.034 (0.103)		−0.276 (0.247)	0.026 (0.124)	0.026 (0.120)
Ingdp2		0.008 (0.012)	−0.002 (0.005)	−0.002 (0.005)		0.014 (0.012)	−0.002 (0.006)	−0.002 (0.006)
Unemploy_rate		−0.021 (0.017)	−0.002 (0.009)	−0.002 (0.009)		−0.023 (0.018)	−0.003 (0.010)	−0.003 (0.009)
Finance_gdp		−0.107 (0.098)	−0.117 (0.120)	−0.117 (0.105)		−0.126 (0.107)	−0.149 (0.129)	−0.149 (0.115)
Deficit_gdp		−0.096 (0.083)	−0.043 (0.081)	−0.043 (0.067)		−0.116 (0.090)	0.055 (0.084)	0.055 (0.073)
Individual fixed effect	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Year fixed effect	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Sample size	574	574	574	574	574	574	574	574
R-squared	0.175	0.121	0.190	0.190	0.181	0.091	0.197	0.197

Source: Authors Calculation.

Table 5. Results of subgroup test.

Variable	Minimum 20%	Next lower 20%	Middle 20%	Next higher 20%	Maximum20%
	(1)	(2)	(3)	(4)	(5)
Gebt_gdp	−0.126*** (0.034)	−0.076** (0.039)	−0.079* (0.047)	0.029 (0.122)	0.305** (0.134)
Ingdp	−0.081 (0.055)	0.007 (0.068)	0.053 (0.085)	0.096 (0.182)	−0.181 (0.233)
Ingdp2	0.006* (0.003)	0.000 (0.003)	−0.002 (0.004)	−0.004 (0.009)	0.008 (0.012)
Unemploy_rate	0.005*** (0.002)	0.004 (0.004)	0.003 (0.005)	−0.002 (0.007)	−0.021 (0.017)
Finance_gdp	0.023 (0.020)	0.010 (0.023)	0.034 (0.035)	−0.024 (0.055)	−0.107 (0.098)
Deficit_gdp	0.026* (0.015)	0.017 (0.021)	0.043 (0.028)	0.060 (0.054)	−0.096 (0.083)
Individual fixed effect	Yes	Yes	Yes	Yes	Yes
Year fixed effect	Yes	Yes	Yes	Yes	Yes
Sample size	574	574	574	574	574
R-squared	0.160	0.128	0.092	0.010	0.121

Source: Authors Calculation.

Table 6. Results of robustness test.

Variable	Wealth_top20		Wealth_gini
	Province	City	Province	City
	(1)	(2)	(3)	(4)
Gebt_gdp	0.387** (0.181)		0.662** (0.293)
Gebt_gdp2		0.391** (0.189)		0.431** (0.248)
Controls	Yes	Yes	Yes	Yes
Individual fixed effect	Yes	Yes	Yes	Yes
Year fixed effect	Yes	Yes	Yes	Yes
Sample size	112	574	112	574
R-squared	0.191	0.050	0.133	0.013

Note: Other control variables (Controls) are the same as in Table 4 and are not reported due to space limitations (Same below).

Source: Authors Calculation.

Table 7. Results of endogeneity problem.

Variable	Wealth_top20		Wealth_gini
	City	Province	City	Province
	(1)	(2)	(3)	(4)
Gebt_gdp	0.498*** (0.188)	0.459*** (0.179)	0.550** (0.221)	0.539*** (0.200)
Controls	Yes	Yes	Yes	Yes
Individual fixed effect	Yes	Yes	Yes	Yes
Year fixed effect	Yes	Yes	Yes	Yes
Sample size	574	112	574	112
AR (1)	0.032	0.007	0.092	0.057
AR (2)	0.230	0.956	0.232	0.164
Hansen	0.199	0.681	0.669	0.577

Note: AR (1), AR (2) and Hansen in the GMM regressions report the p-values of the GMM first-order and second-order serial correlation tests and the Hansen test.

Source: Authors Calculation.

Figure 1. Analysis of impact mechanism.

Source: The authors.

Table 8. Results of microscopic mechanism test.

Variable	Loan	Wealth	Real Estate	Purchase Demand	House share
	(1)	(2)	(3)	(4)	(5)
Panel A: OLS
Wealth	0.035*** (0.002)
Debt_gdp		3.236*** (0.220)	0.183*** (0.023)	0.269*** (0.023)	0.059** (0.024)
Edu	0.008*** (0.001)	0.100*** (0.001)	0.002*** (0.000)	0.002*** (0.000)	0.004*** (0.000)
Age	−0.016*** (0.001)	0.020*** (0.002)	0.015*** (0.001)	−0.008*** (0.001)	0.013*** (0.001)
Age2	0.011*** (0.001)	−0.014*** (0.002)	−0.014*** (0.001)	0.004** (0.001)	−0.011*** (0.001)
Marriage	0.022*** (0.005)	0.238*** (0.013)	0.105*** (0.004)	0.006* (0.003)	0.065*** (0.004)
Health	0.015*** (0.004)	0.266*** (0.009)	0.015*** (0.002)	0.017*** (0.003)	0.004 (0.003)
Sample size	77 056	77 056	77 056	77 056	77 056
R-squared	0.039	0.246	0.030	0.041	0.017
Panel B: 2SLS
Wealth	0.298*** (0.013)
Debt_gdp		1.739*** (0.548)	0.273*** (0.046)	0.128*** (0.045)	0.130*** (0.048)
Controls	Yes	Yes	Yes	Yes	Yes
Sample size	77,056	77,056	77,056	77,056	77,056
R-squared	0.272	0.246	0.030	0.041	0.017

Note: Control variables in Panel B are the same as those in Panel A.

Source: Authors Calculation.

Table 9. Results of heterogeneity test.

Variable	Economic development level		Industrial land
	Eastern	Other	More	Less
	(1)	(2)	(3)	(4)
Debt_gdp	0.127 (0.308)	0.378** (0.174)	0.367** (0.150)	0.227 (0.352)
Controls	Yes	Yes	Yes	Yes
Individual fixed effect	Yes	Yes	Yes	Yes
Year fixed effect	Yes	Yes	Yes	Yes
Sample size	178	396	306	268
R-squared	0.254	0.200	0.220	0.202

Note: The proxy variable for household wealth inequality is the ratio of wealth of the top 20% of wealth households to total wealth.

Source: Authors Calculation.