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This paper evaluates the effect of China’s New Rural Pension Scheme (NRPS) on the retirement sustainability in forms of formal labor supply and informal labor supply in terms of care of grandchildren, using data from China Health and Retirement Longitudinal Study (CHARLS). We explore the regional differences of the NRPS effect on labor supply between the West and the other regions of China. Our analysis shows that rural Western China has a more severe problem of “ceaseless toil” compared to the rest of the country. We find that NRPS improves the “ceaseless toil” situation of the Chinese rural elderly especially in Western China. Our results suggest the need to increase the amount of NRPS payment, and to develop a region-specific pension programs in China.

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This paper studies the impact of fiscal subsidies on the sustainability of China’s rural pension system. We first provide an overview of China’s rural pension system, and explain the formulas used to calculate the pension payments. We then examine how fiscal subsidies, in the forms of basic pensions, incentive pensions, and matching subsidies, affect participation rates and individual contributions. Our study shows that the rural residents’ participation rates can be improved significantly by increasing basic pensions or by providing incentive pensions, but not by providing matching subsidies. However, none of these fiscal subsidies have significant effects on the amount of individual contributions. Overall, our results imply that the incentive pension is an effective mechanism in encouraging rural residents to participate in pension programs, but the current level of matching subsidies is not sufficient to improve participation or increase contributions. Our study suggests the needs to increase the fiscal subsides used in China’s rural pension system, and can provide useful implications in designing the effective pension system for rural residents.

This paper evaluates the effect of China’s New Rural Pension Scheme (NRPS) on the retirement sustainability in forms of both formal labor supply and informal labor supply, using data from China Health and Retirement Longitudinal Study (CHARLS). We explore the regional differences of the NRPS effect on labor supply between the Western regions and the other regions of China. Our analysis shows that western rural China has a more severe problem of “ceaseless toil” compared to the rest of the country. We find that NRPS improves the “ceaseless toil” situation of the Chinese rural elderly, and the results show a very different pattern between western China and other parts of the country.