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Urban household consumption in China: Price, income, and demographic effects

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  • Jing Cao
  • Mun Sing Ho
  • Wenhao Hu
  • Dale Jorgenson

Abstract

Given the government’s goals to restructure the economy away from investment and exports to consumption and to reduce inequality, it is important to have a good understanding of China’s household consumption behavior and to obtain a good measure of consumption adjusted for price differences across regions. We estimate a consumption function that is flexible and distinguishes between different household types such as size and age of head. We develop detailed price data by region, including rental equivalents for owner‐occupied housing. This provides us the estimates of income and price elasticities of different consumption bundles that should be useful for analyzing public policies. We find distinct elasticities for residents of large and small cities. For all urban households the income elasticity for food is about 0.7–0.8, housing is 0.8–0.9, and services is 1.4–1.5. The price elasticity for food and services is about 0.5 and 0.8, respectively.

Suggested Citation

  • Jing Cao & Mun Sing Ho & Wenhao Hu & Dale Jorgenson, 2021. "Urban household consumption in China: Price, income, and demographic effects," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 810-833, May.
  • Handle: RePEc:bla:rdevec:v:25:y:2021:i:2:p:810-833
    DOI: 10.1111/rode.12728
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    References listed on IDEAS

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    2. Xunpeng Shi & Tsun Se Cheong & Jian Yu & Xiaoguang Liu, 2021. "Quality of Life and Relative Household Energy Consumption in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(5), pages 127-147, September.

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