Doctor of Philosophy (PhD)


Department of Economics

Document Type



This dissertation is dedicated to the better understanding of household income, consumption, and savings in the context of China. An unprecedented divergence was found in the Chinese urban-rural household savings rate in the microdata for the period 1995-2013. Specifically, urban households witnessed a boom in their savings rates while their rural counterparts experienced the dramatic opposite. In chapter 2, I empirically investigate the opposing trends in Chinese urban-rural household savings rates. The results show that the increasing urban savings rates can be explained by the rising income and health shocks, whereas the shifts in observed household characteristics are not able to explain the decrease in rural savings rates. The rural-urban savings disparities can be fully explained by the rural-urban income gap. Given the importance of income in affecting household savings rates, in chapter 3, I quantitatively evaluate the effects of the income dimension, in particular, the rising income and income uncertainty, on urban-rural household savings rates using a buffer-stock savings model. The model simulation results indicate that the increase in urban household savings rate can be understood by agents’ precautionary reactions to the intensified income shocks and the reduction in urban pension replacement ratio. The rural household savings rate, on the other hand, appears to be depressed by households’ positive outlook for higher future income. Chapter 4 examines the rising income inequality and consumption inequality observed in the Chinese microdata for the period 1989 - 2009, and finds that the rising permanent income risks can account for those patterns. Households' buffer-stock savings only provide limited self-insurance against income risks.



Committee Chair

Yang, Fang



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