After the Citizenization: Can Household Registration Change Eliminate the Consumption Gap?

Abstract

The urban-rural consumption gap under the influence of the household registration system is a social issue with Chinese characteristics. Can the current reform of the household registration system eliminate this gap? Using the survey data from Chinese Household Income Project (CHIP), this paper adopts the methods of Propensity Score Matching (PSM) and RIF (Re-centered Influence Function) Quantile Decomposition to quantitatively analyze the impact of changes in household registration on the consumption level of “urban hukou (household registration) obtainers” and the influence mechanism. Studies show: (1) There is still a significant difference in the consumption level between “urban hukou obtainers” and urban natives after the citizenization, and the consumption gap between the two groups is even greater after taking endogenous problems into consideration; (2) The impact of the citizenization on the consumption level of “urban hukou obtainers” has a significant heterogeneity. There are significant consumption differences due to different sources of the household registration, and this consumption gap has an expanding trend over time; (3) By decomposition, it is found that such consumption gap mainly comes from the gaps in income and social security between the two groups and its mechanism has been confirmed.