The heterogeneous impact of pension income on elderly living arrangements: evidence from China’s new rural pension scheme
This paper investigates the impact of pension income on living arrangements of the elderly. Taking advantage of a unique opportunity due to the recent establishment and expansion of the New Rural Pension Scheme in China, we explicitly address the endogeneity of pension status and pension income through a fixed-effect model with instrumental variable approach by exploiting exogenous time variation in the program implementation at county level. We find an overall positive effect of pension income on independent living as well as considerable heterogeneity. The positive income effects of the NRPS are concentrated among the elderly with adult children living nearby, of higher socio-economic status, and with better health at baseline; for other groups, the effects are insignificant. We also find that more generous programs exhibit larger effects. Our results highlight that living arrangement is multidimensional in rural China.
KeywordsPension income Living arrangements Heterogeneity China
JEL classificationsJ12 H55 I38
We would like to express appreciation for comments from three anonymous referees, the editor Junsen Zhang, participants of the 2015 Annual Conference of the Chinese Economist Society, the 29th Annual Conference of the European Society for Population Economics, the 1st World Congress of Comparative Economics, and seminars at Central University of Finance and Economics and Renmin University of China. The collection of the data used in this study was supported by NIH R01 grant (R01-AG023627) and the United Nations Fund for Population Activities. This study was supported by the National Natural Science Foundation of China (Grant No. 71110107025, No. 71173227, No. 71673313, and No. 71233001), the National Social Science Fund of China (Grant No. 13CJY028), and Training Program for Major Fundamental Research of Central University of Finance and Economics (Grant No. 14ZZD001).
Compliance with ethical standards
The collection of the data used in this study was supported by NIH R01 grant (R01-AG023627) and the United Nations Fund for Population Activities. This study was supported by the National Natural Science Foundation of China (Grant No. 71110107025, No. 71173227, No. 71673313, and No. 71233001), the National Social Science Fund of China (Grant No. 13CJY028), and Training Program for Major Fundamental Research of Central University of Finance and Economics (Grant No. 14ZZD001).
Conflict of interest
The authors declare that they have no conflict of interest.
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