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The effect of the New Rural Social Pension Insurance program on the retirement and labor supply decision in China

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  • Shu, Lei

Abstract

In 2009, the Chinese government introduced the New Rural Social Pension Insurance (NRSPI) program; it was expanded nationwide in 2012. This paper investigates the effects of the NRSPI program on retirement and old-age labor supply patterns in China, using two-wave nationwide survey data. After controlling for endogenous bias by using instrumental variables, we found that receiving pension benefits from the NRSPI program can substantially increase the likelihood of retirement and reduce the number of working hours among women, even though the amount of NRSPI pension benefits is far below the minimum cost of living. Furthermore, we broke down the labor supply into agricultural and nonagricultural labor supply, and found that most of the decrease in labor supply stems from the agricultural labor supply. We also found that people from different income brackets, contribution levels, education backgrounds, age groups, and household registration statuses behave differently in their retirement and in terms of labor supply decision-making.

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  • Shu, Lei, 2018. "The effect of the New Rural Social Pension Insurance program on the retirement and labor supply decision in China," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 135-150.
    • Handle: RePEc:eee:joecag:v:12:y:2018:i:c:p:135-150
    DOI: 10.1016/j.jeoa.2018.03.007
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    2. Lugo, Maria Ana & Niu, Chiyu & Yemtsov, Ruslan, 2021. "Rural Poverty Reduction and Economic Transformation in China: A Decomposition Approach," SocArXiv 8rbgw, Center for Open Science.
    3. Yang, Jinyang & Bazan Ruiz, Muchin I.A, 2021. "Are pilot experiments random? Social connections and policy expansion in China," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    4. Fang Wang & Haitao Zheng, 2021. "Do Public Pensions Improve Mental Wellbeing? Evidence from the New Rural Society Pension Insurance Program," IJERPH, MDPI, vol. 18(5), pages 1-14, March.
    5. Ren, Yanjun & Liu, Weigang & Huo, Xuexi & Glauben, Thomas, 2023. "The impact of old‐age pension on nutritional outcomes: Evidence from Kyrgyzstan," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 39(S1), pages 1358-1381.
    6. Xing Ji & Jingwen Xu & Hongxiao Zhang, 2022. "How Does China’s New Rural Pension Scheme Affect Agricultural Production?," Agriculture, MDPI, vol. 12(8), pages 1-23, July.
    7. Willy Sier, 2021. "The Price of Aspirations: Education Migrants’ Pursuit of Higher Education in Hubei Province, China," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(1), pages 16-34, February.
    8. Xiaoyu Sun & Weijing Zhu & Aili Chen & Gangqiao Yang, 2022. "Land Certificated Program and Farmland “Stickiness” of Rural Labor: Based on the Perspective of Land Production Function," Land, MDPI, vol. 11(9), pages 1-24, September.
    9. Xin Gao & Tieying Feng, 2020. "Public Pension, Labor Force Participation, and Depressive Symptoms across Gender among Older Adults in Rural China: A Moderated Mediation Analysis," IJERPH, MDPI, vol. 17(9), pages 1-13, May.
    10. Benxi Lin & Zongjian Lin & Yu Yvette Zhang & Weiping Liu, 2018. "The Impact of the New Rural Pension Scheme on Retirement Sustainability in China: Evidence of Regional Differences in Formal and Informal Labor Supply," Sustainability, MDPI, vol. 10(12), pages 1-7, November.
    11. Wang, Yahui & Li, Xiubin & He, Huiyan & Xin, Liangjie & Tan, Minghong, 2020. "How reliable are cultivated land assets as social security for Chinese farmers?," Land Use Policy, Elsevier, vol. 90(C).
    12. Jiyeon An & Taehyun Ahn, 2024. "Influence of social pension on well‐being and health of the rural elderly: the case of South Korea," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 38(1), pages 57-74, May.
    13. Jinghua Sun & Peng Cheng & Zhaoxu Liu, 2023. "Social Security, Intergenerational Care, and Cultivated Land Renting Out Behavior of Elderly Farmers: Findings from the China Health and Retirement Longitudinal Survey," Land, MDPI, vol. 12(2), pages 1-22, January.
    14. Zhaohua Zhang & Yuxi Luo & Derrick Robinson, 2019. "Who Are the Beneficiaries of China’s New Rural Pension Scheme? Sons, Daughters, or Parents?," IJERPH, MDPI, vol. 16(17), pages 1-16, August.
    15. Xiaodong Zheng & Shuangyue Shangguan & Zheng Shen & Hualei Yang, 2023. "Social Pensions and Children’s Educational Outcomes: The Case of New Rural Pension Scheme in China," Journal of Family and Economic Issues, Springer, vol. 44(2), pages 502-521, June.
    16. Xiang Deng & Min Zhang & Chunlin Wan, 2022. "The Impact of Rural Land Right on Farmers’ Income in Underdeveloped Areas: Evidence from Micro-Survey Data in Yunnan Province, China," Land, MDPI, vol. 11(10), pages 1-16, October.

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    More about this item

    Keywords

    Retirement; Old-age Labor Supply; New Rural Social Pension Insurance; Rural China; Heterogeneity effect;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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