The heterogeneous impact of pension income on elderly living arrangements: evidence from China’s new rural pension scheme
- 710 Downloads
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.
- Barrientos A (2009) Social pensions in low-income countries. In: Holzmann R, Robalino D, Takayama N (eds) Closing the coverage gap: the role of social pensions and other retirement income transfers. The World Bank, Washington, DC, pp 73–84Google Scholar
- Becker GS (1981) A treatise on the family. Harvard University Press, CambridgeGoogle Scholar
- Benjamin D, Brandt L, Rozelle S (2000) Aging, wellbeing, and social security in rural northern china. Population Devel Rev 26:89–116Google Scholar
- Cai F, Giles J, Wang D (2009) The well-being of china’s rural elderly. Background Paper for East Asia Social Protection Team. The World Bank, Washington DCGoogle Scholar
- Chen X (2015) Old age pension and intergenerational living arrangements: a regression discontinuity design. Rev Econ Househ:1–22Google Scholar
- Chen X, Hu L, Sindelar J (2015) Leaving money on the table? Pension enrollment decisions in rural china. Paper presented at the 7th IZA/CIER Annual Workshop on Research in Labor Economics, BeijingGoogle Scholar
- Cheng L, Liu H, Zhang Y, Zhao Z (2016) The health implications of social pensions: evidence from china’s new rural pension scheme. J Compar Econ, forthcoming. doi: 10.1016/j.jce.2016.12.002
- Connelly R, Maurer-Fazio M, Zhang D (2014) The role of coresidency with adult children in the labor force participation decisions of older men and women in china. IZA Discussion Paper, No. 8068Google Scholar
- Eggleston K, Sun A, Zhan Z (2016) The impact of rural pensions in China on labor migration. World Bank Econ Rev:lhw032. doi: 10.1093/wber/lhw032
- Gu D (2008) General data quality assessment of the clhls. In: Yi Z, Poston DL, Vlosky DA, Gu D (eds) Healthy longevity in China. The springer series on demographic methods and population analysis, vol 20. Springer, Dordrecht, the Neitherlands, pp 39–60Google Scholar
- Kakwani N, Subbarao K (2005) Aging and poverty in africa and the role of social pensions. Social Protection Discussion Paper 521, The World Bank, Washington, DCGoogle Scholar
- Li B (2007) Pension reform in china: who are left out? In: Cook IG, Powell J (eds) New perspectives on china and aging. NOVA Science Publishers, New York, pp 29–48Google Scholar
- Maruyama S, Johar M (2016) Do siblings free-ride in ‘being there’ for parents? Quantitative Economics, forthcomingGoogle Scholar
- Meng X, Luo C (2008) What determines living arrangements of the elderly in urban China. In: Gustafsson BA, Li S, Sicular T (eds) Inequality and public policy in china. Cambridge University Press, Cambridge, pp 267–286Google Scholar
- Palacios R, Sluchynsky O (2006) Social pensions part i: their role in the overall pension system. Social Protection Discussion paper 36237, the World Bank, Washington, DCGoogle Scholar
- Rosenzweig M, Zhang J (2014) Co-residence, life-cycle savings and inter-generational support in urban china. National Bureau of Economic Research Working Paper No. 20057Google Scholar
- Silverstein M, Chen X, Heller K (1996) Too much of a good thing? Intergenerational social support and the psychological well-being of older parents J Marriage Fam 58:970–982Google Scholar
- State Council (2009) Guiding suggestions of the state council on developing new rural pension scheme pilot. Document 32 [In Chinese.] Accessed March 13, 2017(link:http://www.mohrss.gov.cn/ncshbxs/NCSHBXSzhengcewenjian/200909/t20090901_83916.html)
- Zeng Y, Wang Z (2003) Dynamics of family and elderly living arrangements in China: new lessons learned from the 2000 census. China Rev 3:95–119Google Scholar
- Zhang C, Giles J, Zhao Y (2014) Policy evaluation of China’s new rural pension program: income, poverty, expenditure, subjective wellbeing and labor supply. China Econ Q 14:203–230Google Scholar