Does Housing Inequality Increase the Impact of Urban Household Income Difference on Consumption Difference?
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Does Housing Inequality Increase the Impact of Urban Household Income Difference on Consumption Difference?
ZHAO Wei1,2, GENG Yong1
1. School of Economics and Management, Wuhan University, Wuhan 430072, China; 2. Center for China’s Housing Security and Real Estate Economy Research, Wuhan University, Wuhan 430072, China
Abstract Consumption difference can more truly reflect the difference of family welfare level. To clarify how housing inequality affects the relationship between income difference and consumption difference theoretically and empirically can provide a theoretical basis for better improving residents’ welfare. Therefore, this paper constructs a mathematical model to enlarge the impact of income difference on consumption difference, and uses the data of Chinese General Social Survey (CGSS) to conduct empirical test. We find that the impact of income difference on consumption difference increases by 0.037% and 0.092% respectively for each unit of housing number difference and housing market value difference, and this amplification effect is mainly through two kinds of mechanisms: liquidity constraint and precautionary saving. To be specific, the housing inequality aggravates the income difference and further worsens the consumption difference through rent income and mortgage. The study suggests that the government should further improve the mechanism of income distribution, strengthen housing security, crack down on housing speculation, narrow housing inequality, block the channels of restraining residents’ consumption, and effectively improve social welfare.
ZHAO Wei,GENG Yong. Does Housing Inequality Increase the Impact of Urban Household Income Difference on Consumption Difference?. Economic Survey, 2020, 37(5): 09.
2020, Vol. 37 
