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An empirical study of the relations between China’s social security expenditure and consumption level

Zhao Jianguo, Li Jia

Abstract


Combined with the characteristics of China’s urban and rural dual economic structure, this paper analyzes the relationship between social security expenditure and consumption level in depth through improving consumer optimal model, and attaches importance to the influence of the income index. The author tests the relationship between social security expenditure and consumption empirically by using co-integration theory and other methods on the basis of optimal theory model in which the income index was added. Then it draws the conclusion that social security spending has significantly contributed to the consumption lifting in both urban and rural areas in a long-term. Especially, the rural social security expenditure has a greater marginal effect on consumption. These conclusions provide a realistic theoretical basis for China to improve social security system and raise the level of consumption of rural residents.

Keywords


Social security expenditure, consumption level, optimal theory of consumer.

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