Market infrastructure integration and upgrading of resident consumption—Evidence from a panel of Chinese micro households

Abstract

Using long-term household data from the China Family Panel Studies (CFPS), we examine the impact of market infrastructure integration on Chinese residents’ consumption structure improvement. The findings demonstrate that market infrastructure integration not only enhances household consumption but also particularly facilitates this improvement among rural areas and low-income groups. On one hand, market infrastructure integration boosts households’ ability to consume by increasing their income and wage income shares. On the other hand, it stimulates enterprises to invest more in product innovation, thereby enhancing the quality of consumer goods. Additionally, the influence of market infrastructure integration in promoting consumption is bolstered by internet technology and financial inclusion. However, these factors primarily stimulate demand for basic necessities rather than contributing to a shift toward higher-quality products and thus hinder efforts to upgrade the consumption structure.