On May 12, 2023, the 36th Xi Xian Forum on Income Distribution and Public Finance, jointly organised by the Institute of Social Sciences of ZUEL, the School of Public Finance and Taxation and IIDPF, was successfully held in Conference Room 119 of Wenqin Building. As the keynote speaker of this session, Associate Professor Huang Wei from the National Development Institute of Peking University was invited to deliver a lecture entitled How do Households Respond to Permanent and Transitory Income Shocks? Evidence from Pension Reforms in Urban China. The forum was chaired by Professor Lu Yuanping, Executive Director of IIDPF, and was attended by more than 30 faculty members and students, including Professor Yang Guochao from the School of Economics, Associate Professor Zhao Ying and Associate Professor Yan Weibo from the School of Public Finance and Taxation.

How consumption responds to income shocks is a central topic of research in the field of economics, and understanding how household consumption responds to temporary or permanent income changes is important for both academic research and policy making. Using a representative monthly panel dataset, Dr Wei Huang examines how household consumption responds to temporary and permanent pension increases, based on policy changes in urban pension income increases in China. The study finds that, on average, the estimated marginal propensity to consume (MPC) ranges from 0.64 to 0.78 under permanent income changes and 0.05 to 0.12 under temporary income changes for each pension increase, which is consistent with the structural estimation results. In addition, the consumption response varies by consumption category, with larger MPCs estimated among households with higher mobility constraints in comparison, and no significant change in consumption among other households.

Dr. Huang Wei gave a fascinating talk to the audience and also stimulated in-depth thinking on the research topic. During the discussion session, faculty and students actively shared their views on the research design, sample selection and policy identification.