Income Inequality, Credit Constraints and Social Status Seeking of Households in Rural China
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| Title | Income Inequality, Credit Constraints and Social Status Seeking of Households in Rural China
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| Author | Hang Bin and Yan Xinhua |
| Organization | School of Statistics, Shanxi University of Finance & Economics |
| Email | hb-1493@163.com；yxhstat@163.com |
| Key Words | Income Inequality; Social Status Seeking; Credit Constraints; Positional Consumption |
| Abstract | The article makes a theoretical and empirical analysis of the relationship between income inequality and households consumption in rural China by creating a new theoretical framework based on consumption externality and credit constraints. The analysis is conducted through tracing the micro survey data in 2010 and 2014, in which endurable consumption goods are assumed as positional goods and unendurable goods as non-positional goods. In addition, the growth rate of farming households’ income is viewed as the level of liquidity constraints. We have found that, firstly, the relationship between inequality income and consumption is related to people’s concern for social status. This, meanwhile, also relates to the validity of credit markets. Secondly, income gap has completely different impacts on the consumption of positional goods and non-positional goods. Under the credit constraints, comparison of positional consumption will squeeze out non-positional consumption. Stronger liquidity constraints lead to greater restraining force that income gap has exerted to non-positional consumption. |
| Serial Number | WP1263 |
| Time | 2018-02-23 |
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