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Hukou and Consumption Heterogeneity: Migrants' Expenditure Is Depressed by Institutional Constraints in Urban China

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  • Binkai Chen
  • Ming Lu
  • Ninghua Zhong

Abstract

This paper provides a new explanation for China's extremely low consumption-to-GDP ratio, highlighting the constraints of the "household registration system" (Hukou) on China's household consumption. Our baseline results show that the consumption of migrants without an urban Hukou is 30.7% lower than that of urban residents. Moreover, consumption heterogeneity cannot be explained by migration effects, culture, social norms, habits or some other forms of household heterogeneity. Further studies on the composition of household consumption have shown that the gaps are largest in areas such as education and culture, durable goods and health. As both the number and income level of migrants are rising, the constraining effects of Hukou on household consumption will continue to increase.

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File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd11-221.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd11-221.

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Date of creation: Feb 2012
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Handle: RePEc:hst:ghsdps:gd11-221

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Keywords: Consumption; Heterogeneity; Hukou System; Migrants; Urban Residents;

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References

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  1. Afridi, Farzana & Li, Sherry Xin & Ren, Yufei, 2012. "Social Identity and Inequality: The Impact of China's Hukou System," IZA Discussion Papers 6417, Institute for the Study of Labor (IZA).
  2. Kerwin Kofi Charles & Erik Hurst & Nikolai Roussanov, 2009. "Conspicuous Consumption and Race," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 425-467, May.
  3. Chamon, Marcos & Prasad, Eswar, 2007. "Why Are Saving Rates of Urban Households in China Rising?," IZA Discussion Papers 3191, Institute for the Study of Labor (IZA).
  4. Christopher D. Carroll & Byung-Kun Rhee & Changyong Rhee, 1998. "Does Cultural Origin Affect Saving Behavior? Evidence from Immigrants," NBER Working Papers 6568, National Bureau of Economic Research, Inc.
  5. Ge, Suqin & Yang, Dennis T., 2010. "Labor Market Developments in China: A Neoclassical View," IZA Discussion Papers 5377, Institute for the Study of Labor (IZA).
  6. Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2010. "China has reached the lewis turning point," IFPRI discussion papers 977, International Food Policy Research Institute (IFPRI).
  7. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
  8. Whalley, John & Zhang, Shunming, 2007. "A numerical simulation analysis of (Hukou) labour mobility restrictions in China," Journal of Development Economics, Elsevier, vol. 83(2), pages 392-410, July.
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Cited by:
  1. Ge, Suqin & Yang, Dennis T. & Zhang, Junsen, 2012. "Population Policies, Demographic Structural Changes, and the Chinese Household Saving Puzzle," IZA Discussion Papers 7026, Institute for the Study of Labor (IZA).

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