IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp6797.html
   My bibliography  Save this paper

Pension Coverage for Parents and Educational Investment in Children: Evidence from Urban China

Author

Listed:
  • Mu, Ren

    (Texas A&M University)

  • Du, Yang

    (Chinese Academy of Social Sciences)

Abstract

When social security is established to provide pensions to parents, their reliance upon children for future financial support decreases; and their need to save for retirement also falls. We use the expansion of pension coverage from the state sector to the non-state sector in urban China as a quasi-experiment to analyze the intergenerational impact of social security on educational investments in children. With a difference-in-differences framework, we find a significant increase in the total education expenditure attributable to pension expansion. The results are unlikely to be driven by trends in medical insurance, wages, bonus income, and housing values. They are robust to the inclusion of a large set of control variables and to different specifications, including one based on the instrumental variable method.

Suggested Citation

  • Mu, Ren & Du, Yang, 2012. "Pension Coverage for Parents and Educational Investment in Children: Evidence from Urban China," IZA Discussion Papers 6797, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6797
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp6797.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Xiaoyan Lei & John Strauss & Meng Tian & Yaohui Zhao, 2011. "Living Arrangements of the Elderly in China Evidence from CHARLS," Working Papers WR-866, RAND Corporation.
    3. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1982. "Parental Preferences and Provision for Progeny," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 52-73, February.
    4. Cai, Fang & Giles, John & Meng, Xin, 2006. "How well do children insure parents against low retirement income? An analysis using survey data from urban China," Journal of Public Economics, Elsevier, vol. 90(12), pages 2229-2255, December.
    5. Shang-Jin Wei & Xiaobo Zhang, 2011. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 511-564.
    6. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," The World Bank Economic Review, World Bank, vol. 17(1), pages 1-25, June.
    7. Donald Cox, 1990. "Intergenerational Transfers and Liquidity Constraints," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(1), pages 187-217.
    8. Marianne Bertrand & Sendhil Mullainathan & Douglas Miller, 2003. "Public Policy and Extended Families: Evidence from Pensions in South Africa," The World Bank Economic Review, World Bank, vol. 17(1), pages 27-50, June.
    9. Charles Hohm, 1975. "Social security and fertility: An international perspective," Demography, Springer;Population Association of America (PAA), vol. 12(4), pages 629-644, November.
    10. Chamon, Marcos & Liu, Kai & Prasad, Eswar, 2013. "Income uncertainty and household savings in China," Journal of Development Economics, Elsevier, vol. 105(C), pages 164-177.
    11. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 151-182, July.
    12. Pollak, Robert A, 1988. "Tied Transfers and Paternalistic Preferences," American Economic Review, American Economic Association, vol. 78(2), pages 240-244, May.
    13. repec:cto:journl:v:21:y:2002:i:3:p:395-414 is not listed on IDEAS
    14. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 391-430.
    15. Becker, Gary S & Murphy, Kevin M, 1988. "The Family and the State," Journal of Law and Economics, University of Chicago Press, vol. 31(1), pages 1-18, April.
    16. Amalia R. Miller & Lei Zhang, 2012. "Intergenerational Effects of Welfare Reform on Educational Attainment," Journal of Law and Economics, University of Chicago Press, vol. 55(2), pages 437-476.
    17. Feng, Jin & He, Lixin & Sato, Hiroshi, 2011. "Public pension and household saving: Evidence from urban China," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 470-485.
    18. Avraham Ebenstein & Steven Leung, 2010. "Son Preference and Access to Social Insurance: Evidence from China's Rural Pension Program," Population and Development Review, The Population Council, Inc., vol. 36(1), pages 47-70, March.
    19. Raut, L. K., 1990. "Capital accumulation, income distribution and endogenous fertility in an overlapping generations general equilibrium model," Journal of Development Economics, Elsevier, vol. 34(1-2), pages 123-150, November.
    20. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    21. Gary S. Becker & H. Gregg Lewis, 1974. "Interaction between Quantity and Quality of Children," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 81-90, National Bureau of Economic Research, Inc.
    22. Zachary Zimmer & Linda Martin & Mary Ofstedal & Yi-Li Chuang, 2007. "Education of adult children and mortality of their elderly parents in Taiwan," Demography, Springer;Population Association of America (PAA), vol. 44(2), pages 289-305, May.
    23. Kathleen McGarry & Robert F. Schoeni, 1995. "Transfer Behavior in the Health and Retirement Study: Measurement and the Redistribution of Resources within the Family," Journal of Human Resources, University of Wisconsin Press, vol. 30, pages 184-226.
    24. Becker, Gary S., 1992. "The Economic Way of Looking at Life," Nobel Prize in Economics documents 1992-1, Nobel Prize Committee.
    25. Lee Lillard & Robert Willis, 1997. "Motives for interqenerational transfers: Evidence from Malaysia," Demography, Springer;Population Association of America (PAA), vol. 34(1), pages 115-134, February.
    26. Felix Salditt & Peter Whiteford & Willem Adema, 2008. "Pension reform in China," International Social Security Review, John Wiley & Sons, vol. 61(3), pages 47-71, July.
    27. Gruber, Jonathan & McKnight, Robin, 2003. "Why did employee health insurance contributions rise?," Journal of Health Economics, Elsevier, vol. 22(6), pages 1085-1104, November.
    28. Li, Shi & Xing, Chunbing, 2010. "China's Higher Education Expansion and its Labor Market Consequences," IZA Discussion Papers 4974, Institute of Labor Economics (IZA).
    29. Lei, Xiaoyan & Strauss, John & Tian, Meng & Zhao, Yaohui, 2011. "Living Arrangements of the Elderly in China: Evidence from CHARLS," IZA Discussion Papers 6249, Institute for the Study of Labor (IZA).
    30. John Giles & Ren Mu, 2007. "Elderly parent health and the migration decisions of adult children: Evidence from rural China," Demography, Springer;Population Association of America (PAA), vol. 44(2), pages 265-288, May.
    31. Takayama, Noriyuki & 高山, 憲之 & タカヤマ, ノリユキ, 2002. "Pension Reform of PRC: Incentives, Governance and Policy Options," Discussion Paper 129, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuan, Cheng & Zhang, Lei, 2015. "Public education spending and private substitution in urban China," Journal of Development Economics, Elsevier, vol. 115(C), pages 124-139.
    2. Si, Ruichao, 2021. "Unexpected pressure? The effect of a curriculum reform on household educational investments and student outcomes," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 730-746.
    3. Raymond Boadi Frempong & David Stadelmann, 2021. "Risk preference and child labor: Econometric evidence," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 878-894, May.
    4. C�line Bonnefond & Matthieu Cl�ment & Fran�ois Combarnous, 2015. "In search of the elusive Chinese urban middle class: an exploratory analysis," Post-Communist Economies, Taylor & Francis Journals, vol. 27(1), pages 41-59, March.
    5. Yun Liang & John Gibson, 2017. "Do More Grandchildren Lead to Worse Health Status of Grandparents? Evidence from the China Health and Nutrition Survey," Working Papers in Economics 17/18, University of Waikato.
    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. Jing You & Miguel Niño‐Zarazúa, 2019. "The Intergenerational Impact of China's New Rural Pension Scheme," Population and Development Review, The Population Council, Inc., vol. 45(S1), pages 47-95, December.
    8. Cheng Yuan & Chengjian Li & Lauren A. Johnston, 2018. "The intergenerational education spillovers of pension reform in China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(3), pages 671-701, July.
    9. Jing You & Miguel Niño-Zarazúa, 2017. "Smoothing or strengthening the ‘Great Gatsby Curve’? The intergenerational impact of China’s New Rural Pension Scheme," WIDER Working Paper Series 199, World Institute for Development Economic Research (UNU-WIDER).
    10. Jing You & Miguel Niño-Zarazúa, 2017. "Smoothing or strengthening the 'Great Gatsby curve'?: The intergenerational impact of China's New Rural Pension Scheme," WIDER Working Paper Series wp-2017-199, World Institute for Development Economic Research (UNU-WIDER).
    11. Ye, Juntao & Cai, Liming & Shi, Xinjie & Cheng, Mingwang, 2024. "Pursuing a brighter future: Impact of the Hukou reform on human capital investment in migrant children in China," China Economic Review, Elsevier, vol. 85(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raut, Lakshmi K. & Tran, Lien H., 2005. "Parental human capital investment and old-age transfers from children: Is it a loan contract or reciprocity for Indonesian families?," Journal of Development Economics, Elsevier, vol. 77(2), pages 389-414, August.
    2. Lakshmi K Raut & Lien H Tran, 1998. "Motives for Investment in Human Capital of Children: Evidence from Indonesian Family Life Survey Data," Working Papers 199801, University of Hawaii at Manoa, Department of Economics.
    3. Fernanda Mazzotta & Lavinia Parisi, 2020. "Money and time: what would you give back to me? Reciprocity between children and their elderly parents in Europe," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 941-969, October.
    4. Wolff, Francois-Charles & Laferrere, Anne, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 13, pages 889-969, Elsevier.
    5. Arrondel, Luc & Masson, Andre, 2006. "Altruism, exchange or indirect reciprocity: what do the data on family transfers show?," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 14, pages 971-1053, Elsevier.
    6. Marta Melguizo Garde, 2007. "La motivación de las transmisiones lucrativas entre generaciones de una familia: modelos teóricos y evidencia empírica," Hacienda Pública Española / Review of Public Economics, IEF, vol. 181(2), pages 81-118, June.
    7. Christine Ho, 2019. "Child’s gender, parental monetary investments and care of elderly parents in China," Review of Economics of the Household, Springer, vol. 17(3), pages 741-774, September.
    8. Nikolov, Plamen & Adelman, Alan, 2019. "Do private household transfers to the elderly respond to public pension benefits? Evidence from rural China," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    9. Lei, Xiaoyan & Giles, John & Hu, Yuqing & Park, Albert & Strauss, John & Zhao, Yaohui, 2012. "Patterns and correlates of intergenerational non-time transfers : evidence from CHARLS," Policy Research Working Paper Series 6076, The World Bank.
    10. Jing You & Miguel Niño‐Zarazúa, 2019. "The Intergenerational Impact of China's New Rural Pension Scheme," Population and Development Review, The Population Council, Inc., vol. 45(S1), pages 47-95, December.
    11. Stefan Hochguertel & Henry Ohlsson, 2009. "Compensatory inter vivos gifts," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 993-1023.
    12. Francois-Charles Wolff & Seymour Spilerman & Claudine Attias-Donfut, 2005. "Do Parents Help More their Less Well-Off Children? Evidence from a Sample of Migrants to France," Microeconomics 0504001, University Library of Munich, Germany.
    13. Donald Cox & Oded Stark, 2007. "On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect," Chapters, in: Luigino Bruni & Pier Luigi Porta (ed.), Handbook on the Economics of Happiness, chapter 18, Edward Elgar Publishing.
    14. Cox, Donald & Hansen, Bruce E. & Jimenez, Emmanuel, 2004. "How responsive are private transfers to income? Evidence from a laissez-faire economy," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2193-2219, August.
    15. McGarry, Kathleen, 1999. "Inter vivos transfers and intended bequests," Journal of Public Economics, Elsevier, vol. 73(3), pages 321-351, September.
    16. Yang‐Ming Chang & Dennis L. Weisman, 2005. "Sibling Rivalry and Strategic Parental Transfers," Southern Economic Journal, John Wiley & Sons, vol. 71(4), pages 821-836, April.
    17. Cox, Donald & Eser, Zekeriya & Jimenez, Emmanuel, 1998. "Motives for private transfers over the life cycle: An analytical framework and evidence for Peru," Journal of Development Economics, Elsevier, vol. 55(1), pages 57-80, February.
    18. François‐Charles Wolff & Seymour Spilerman & Claudine Attias‐Donfut, 2007. "Transfers From Migrants To Their Children: Evidence That Altruism And Cultural Factors Matter," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 619-644, December.
    19. Menghua Li & Yun Zhou & Xinjie Shi, 2021. "Who Will Care for Middle Aged and Elderly Parents in Rural China?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(2), pages 123-150, March.
    20. Kyeongkuk Kim & Sang-Hyop Lee & Timothy J Halliday, 2018. "The Betrayed Generation? Intra-Household Transfers and Retirement Behavior in South Korea," Working Papers 201804, University of Hawaii at Manoa, Department of Economics.

    More about this item

    Keywords

    urban; pension; education expenditure; gender difference; China;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6797. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.