A Study on the Influence of the Income Structure on the Consumption Structure of Rural Residents in China

Abstract

The gentle development of the economy is an important link to realize sustainable development in a holistic way. In recent years, due to the notable decline in the scale of exports and investment, China’s economic growth has decreased significantly, and consumption has become the main force driving economic growth. Promoting sustainable economic development is an important problem in the current development of China. In this study, the ELES model was adopted to analyze how the consumption structure is affected by the income structure among rural residents in China. The results show the following: (1) The income structure of rural residents has a significant impact on the consumption structure, and their consumption behaviors conform to the “mental accounting” hypothesis. (2) Net property income and net transfer income account for a small proportion, but marginal propensity to consume (referred to as MPC) is relatively large. Net operating income and wage income form a large proportion of disposable income with low MPC. (3) In the future, expenditures on food, tobacco, and alcohol will slow down remarkably, and more money will be spent on healthcare, transportation and communication, and housing, forming an increasing proportion of expenditures. In summary, this study suggests that scientific and effective policy measures should be issued to boost the income level of rural residents in a targeted manner, optimize the income structure, and improve the rural consumption environment, so as to comprehensively promote rural consumption.