The Income Effect and Demonstration Effect of Urbanization on Rural Inhabitant Average Propensity to Consume in China: 2000-2009
YI Xing-jian1,2,WU Qing-yuan2,YANG Bi-yun2
1.Institute of Quantitative Technical Economics, Chinese Academy of Social Sciences, Beijing 100732, China; 2.School of International Trade and Economics, Guangdong University of Foreign Studies, Guangzhou 510006, China
Abstract This paper examines the relationship between urbanization and rural consumption in China by the provincial panel data from 2000 to 2009. The income effect and demonstration effect raised in the process of urbanization are measured through decompositing the income structure and consumption structure. It is found that urbanization has significant pulling effect, which is especially strong in the poor west region, on APC in rural China. We also establish the wage income channel as main way for income effect. In addition, it tells that demonstration effect works on non-rigid consumption. Lastly, after explaining the empirical findings, the paper considers the deep implications for the expansion of rural consumption demand through urbanization, and then proposes policies and further research views.
YI Hang-Jian,TUN Qiang-Yuan,YANG Bi-Yun. The Income Effect and Demonstration Effect of Urbanization on Rural Inhabitant Average Propensity to Consume in China: 2000-2009. Economic Survey, 2013, 1(5): 025.
2013, Vol. 1 
