Will the Income Disparity Increase the Family’s Educational Consumption? An Empirical Analysis Based on CFPS 2014 Data

Education is a ladder to promote the rational flow of social classes. In the case of uneven income, low-income families have a strong incentive to improve their income class by increasing their investment in education. Using CFPS2014 micro-survey data, this paper empirically tests the incentive effect of the income gap on family education consumption. The basic regression results show that the income gap has a significant role in promoting family education consumption. Specifically, for every 1 percentage point increase in the Gini coefficient which represents the income gap, family education consumption trend will increase by 1.359 percentage points. The heterogeneity analysis shows that, for families with different characteristics, there is obvious heterogeneity in the influence of the income gap on family education consumption. First, all samples are divided into high-income family groups and low-income family groups according to the average per capita household income. The results show that the influence of the income gap on family education consumption is significant in low-income families and not significant in high-income families. Second, all samples are divided into groups with families attending high school and other family groups according to the school hierarchy that family members attend. The results show that the influence of the income gap on household education consumption is significant in families with members attending senior high school and below the education level, but not significant in other family groups. In order to ensure the credibility of the basic regression conclusions, we also conduct a series of robustness tests, including eliminating demonstration effects” of the consumption, overcoming endogenous biases caused by the neglect of government quality, changing measurement of the income gap, and so on. The results are still steady. The conclusions of this paper expand the explanation scope of the continuous increase of education consumption in China, and also have important policy reference values. On the one hand, in the case of income inequality, households have an internal incentive to increase investment in education to promote their income class. Therefore, it is necessary to protect the accessibility of public education opportunities, especially education opportunities to low-income groups, in which way they can achieve a reasonable mobility of social classes, and effectively avoid the generational transmission of income and poverty. On the other hand, because the income gap has a positive incentive effect on educational spending, it also means that an excessive income gap may cause households to over-consume in education, which in turn increases the economic burden on residents and reduces the level of family life. Therefore, relevant departments should control the income gap within a reasonable range and strengthen public education investment to avoid the family’s potential risks of poverty caused by education” and poverty returned by education”.