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


  • Binkai Chen
  • Ming Lu
  • Ninghua Zhong


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.

Suggested Citation

  • Binkai Chen & Ming Lu & Ninghua Zhong, 2012. "Hukou and Consumption Heterogeneity: Migrants' Expenditure Is Depressed by Institutional Constraints in Urban China," Global COE Hi-Stat Discussion Paper Series gd11-221, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd11-221

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    References listed on IDEAS

    1. Afridi, Farzana & Li, Sherry Xin & Ren, Yufei, 2015. "Social identity and inequality: The impact of China's hukou system," Journal of Public Economics, Elsevier, vol. 123(C), pages 17-29.
    2. Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2011. "China has reached the Lewis turning point," China Economic Review, Elsevier, vol. 22(4), pages 542-554.
    3. John Whalley & Shunming Zhang, 2011. "A Numerical Simulation Analysis Of (Hukou) Labour Mobility Restrictions In China," World Scientific Book Chapters,in: China's Integration Into The World Economy, chapter 11, pages 295-324 World Scientific Publishing Co. Pte. Ltd..
    4. Ge, Suqin & Yang, Dennis Tao, 2011. "Labor market developments in China: A neoclassical view," China Economic Review, Elsevier, vol. 22(4), pages 611-625.
    5. Kerwin Kofi Charles & Erik Hurst & Nikolai Roussanov, 2009. "Conspicuous Consumption and Race," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 425-467.
    6. Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
    7. Carroll, Christopher D & Rhee, Byung-Kun & Rhee, Changyong, 1999. "Does Cultural Origin Affect Saving Behavior? Evidence from Immigrants," Economic Development and Cultural Change, University of Chicago Press, vol. 48(1), pages 33-50, October.
    8. Shang-Jin Wei & Xiaobo Zhang, 2011. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 511-564.
    9. Christopher D. Carroll & Byung-Kun Rhee & Changyong Rhee, 1994. "Are There Cultural Effects on Saving? Some Cross-Sectional Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 685-699.
    10. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244, June.
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    Cited by:

    1. Chen, Zhao & Lu, Ming & Xu, Le, 2014. "Returns to dialect," China Economic Review, Elsevier, vol. 30(C), pages 27-43.
    2. repec:spr:soinre:v:132:y:2017:i:1:d:10.1007_s11205-016-1247-z is not listed on IDEAS
    3. Tani, Massimiliano, 2015. "Hukou Changes and Subjective Well-Being," IZA Discussion Papers 9451, Institute for the Study of Labor (IZA).
    4. 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).

    More about this item


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

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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