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Income Redistribution In Urban China By Social Security System—An Empirical Analysis Based On Annual And Lifetime Income

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  • LIXIN HE
  • HIROSHI SATO

Abstract

This study investigates the redistributive effect of the social security reform in urban China using the nationally representative urban household surveys in 1995 and 2002. The main findings are as follows. First, public pension is the main income for the elderly in urban China. Majority of people aged 60 and over (72% in 1995, 82% in 2002) have pension. Second, the social security system in urban China improved the income of low-income and older age groups and reduced the relative poverty rate. However, the redistributive effect did not offset the expanding income inequality, which resulted in the Gini coefficient of redistributed income in 2002 being higher than that in 1995. Third, during 1995 and 2002, both low income group and high income group get positive net benefit from social security system, but the net benefit is increasing with income. There is an adverse income transfer in social security system no matter measured on annual income or lifetime income. Fourth, assuming that the reformed policy were applied to public sector employees, the long-term redistributive effect of the pension system for the working population, as calculated using their lifetime income, would be larger.
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  • Lixin He & Hiroshi Sato, 2013. "Income Redistribution In Urban China By Social Security System—An Empirical Analysis Based On Annual And Lifetime Income," Contemporary Economic Policy, Western Economic Association International, vol. 31(2), pages 314-331, April.
  • Handle: RePEc:bla:coecpo:v:31:y:2013:i:2:p:314-331
    DOI: j.1465-7287.2011.00301.x
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. A Primer on Poverty and Economic Growth
      by Filip Spagnoli in P.A.P.-Blog on 2014-05-06 23:48:31

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    Cited by:

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    4. Yao, Wenyun & Lu, Feier & Wang, Yuting & Song, Zilong, 2023. "Social insurance contributions and firms' debt concentration choice: A quasi-natural experiment based on the implementation of China's social insurance law," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    5. Vanesa Jorda & Jose M. Alonso, 2020. "What works to mitigate and reduce relative (and absolute) inequality?: A systematic review," WIDER Working Paper Series wp-2020-152, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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