It Takes Three to Ceilidh: Pension System and Multidimensional Poverty Mitigation in China

This research employs the Alkire-Foster approach to measure multidimensional poverty between 2012 and 2020 in China, followed by examining the role of the three-pillar pension system in mitigating household multidimensional poverty. With the China Family Panel Studies data, our measurement uncovers the sustainable effects and mechanisms of household participation in the multi-pillar pension system on poverty mitigation. The results indicate that more participation in the pension system mitigates the probability of being trapped in multidimensional poverty. The findings reveal the significance of state social insurance, enterprise annuity, and individual commercial insurance. The mitigation effect of market-oriented pillars is achieved through more investment in and consumption for livelihood assets. Based upon the sustainable livelihoods framework, livelihood assets ameliorate household capabilities in human, natural, financial, and psychological capital against risks, shocks, and uncertainties. Our research contributes to the knowledge of how household participation in pension pillars sustainably mitigates multidimensional poverty through micro-level mechanisms and to the policy praxis of why a facilitating state is called for poverty mitigation from the perspective of new structural economics.