Analyzing the Proportional Relationship Between Household Consumption Expenditure and Wage Income in Chongqing: A Statistical and Economic Perspective

Abstract

This paper mainly examines the proportional relationship between household consumption expenditure and wage income in Chongqing, China’s most populous municipality, with distinct urban-rural integration characteristics. Guided by classical economic theories (e.g., Keynes’ Absolute Income Hypothesis, Modigliani & Brumberg’s Life-Cycle Hypothesis) and statistical analysis tools—including Engel coefficient calculation, expenditure elasticity modeling, and proportionality index measurement—the study evaluates whether wage growth aligned with consumption expenditure changes across different income groups and expenditure categories in Chongqing from 2015 to 2023. Data were collected from three authoritative sources: Chongqing Statistical Yearbooks (2015–2023), the 2020 China Household Finance Survey (CHFS) by Southwestern University, and the Urban Household Survey (UHS) administered by the National Bureau of Statistics (NBS) Chongqing Branch. Key findings reveal three critical imbalances: First, wage growth has failed to keep pace with the rising costs of essential consumption, particularly housing and education, with housing expenditure accounting for 31.4% of middle-income households’ income in 2022 (up 9.3 percentage points from 2015) and education expenditure shares increasing by 4.3 percentage points over the same period. Second, the Engel coefficient (a key indicator of living standards) shows a persistent urban-rural gap: 30.2% for urban households versus 38.7% for rural households in 2022, reflecting uneven welfare improvements. Third, 1% increase in income leads to a more than 1% rise in these expenditures.