Sharing High Growth across Generations: Pensions and Demographic Transition in China

Song, Zheng; Storesletten, Kjetil; Wang, Yikai; Zilibotti, Fabrizio

doi:10.1257/mac.20130322

Cited by 56 publications

(55 citation statements)

References 43 publications

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“…2 The demographic transition would also a¤ect other aspects of the economy. See Song et al (2012) for a recent study on the inter-relationship between China's demographic transition and its economic growth and pension reforms.…”

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confidence: 99%

Population policies, demographic structural changes, and the Chinese household saving puzzle

Yang

Zhang

2018

European Economic Review

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Using combined data from population censuses and Urban Household Surveys, we study the effects of demographic structural changes on the rise in household saving in China.Variations in fines across provinces on unauthorized births under the one-child policy and in cohort-specific fertility influenced by the implementation of population control policies are exploited to facilitate identification. We find evidence that older households with a reduced number of adult children save more because of old-age security concerns, middle-aged households experience an increase in saving due to the lighter burden of dependent children, and younger households save more because of having fewer siblings to share the responsibility of parental care. These findings lend support to a simple economic model in which the effects of population control policies are investigated in the context of household saving decisions in China.JEL Classification: E21, J11, J13

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confidence: 99%

Population policies, demographic structural changes, and the Chinese household saving puzzle

Yang

Zhang

2018

European Economic Review

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“…Our framework does not allow for a dual economy with a rural-urban divide, although it would be a natural extension for the case of China. Without harmonization in pension entitlements between rural and urban areas, high migration rates towards cities would help advance the reform in urban areas by increasing the urban working population and contributions (Song et al (2013)). Naturally, the more universal is the reform, the less helpful internal migrations are.…”

Section: Sensitivity Analysis and Discussionmentioning

confidence: 99%

“…21 The experiment we analyze consists in increasing θ from its initial value of 1% to 10% at t = 3 (when the one-child policy is relaxed and social security reforms are implemented). 22 Results are shown in Figure 5.…”

Section: Capital Markets Reformsmentioning

confidence: 99%

“…This implies that, unlike our experiment, a fall in price distortions (interest rate liberalization) would be even more harmful for the government's budget. 22 Strictly speaking, such a reform implies that households are allowed to borrow ten times more. Such a shock can appear large but note that over the period 2000-2010, household debt (as a share of GDP) in China was multiplied by Contribution rate (in %)…”

Section: Capital Markets Reformsmentioning

confidence: 99%

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Fertility Policies and Social Security Reforms in China

Coeurdacier¹,

Guibaud²,

Jin³

2014

IMF Econ Rev

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This paper analyzes the impact of relaxing fertility controls and expanding social security in China. We develop an overlapping generations model in which fertility decisions and capital accumulation are endogenously determined in the presence of social security. In our model, children are an alternative savings technology-as they transfer resources to their retired parents. Important feedback links arise between fertility and social security variables: an expansion of social security benefits reduces fertility-partially offsetting the effects of relaxing the one-child policy. The feedback loop between social security variables and fertility suggests that abandoning fertility restrictions may not be as effective in helping to finance China's intended pension reform, especially if children are an important source of old-age support. The sustainability of the pension system is particularly at risk in the event of a growth slowdown. The objective of pension reforms may also be incongruent with other reforms, such as financial liberalization and financial integration.

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“…Merette (2005), Zhang (2007), Cai (2008), Zeng (2011), Diamond (2008, 2010) and Dorfman et al (2013) all discuss proposals regarding increases in the retirement age; of these Li and Merette (2005), Zeng (2011) and Dorfman et al (2013) analyse possible effects; the first two focus on the pension system itself in the framework of a CGE model and the third on the labour market. A recent paper by Song et al (2015) simulates the welfare effects of a range of pension reforms in China but does not include a change in the retirement age. None of these papers adds a regional dimension to their analysis.…”

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An increase in the retirement age in China: the regional economic effects

Chen

Groenewold

2016

Applied Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. China"s pension system is in need of comprehensive reform in that it is fragmented in its coverage and significantly under-funded. One measure which has featured in various reform proposals and on which we focus in this paper is to increase the retirement age. Since demographics and industry structure differ considerably across the regions in China, it is likely that a change in retirement age will have significantly different effects across China"s regions. Inter-regional disparities are already very substantial in China and it will be important to know whether changes in pension arrangements will widen or narrow these disparities. It is the object of the research reported in this paper to throw light on this question. To do this we construct a small two-region theoretical model having some Chinese characteristics. We linearise the model and solve it numerically using parameter values derived from Chinese data. We run four experiments, all involving an increase in the retirement age from 60 to 61. The simulations differ according the use made of the extra revenue generated by the policy. All four policies increase welfare and reduce the interregional welfare gap. However, the effects on other, more visible, measures of inter-regional gaps (such as income and output) are less clear and might generate resistance to the policy change, especially by the skilled who generally face reduced wages and income and have to work longer. (about 230 words) Terms of use: Documents in

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Sharing High Growth across Generations: Pensions and Demographic Transition in China

Cited by 56 publications

References 43 publications

Population policies, demographic structural changes, and the Chinese household saving puzzle

Population policies, demographic structural changes, and the Chinese household saving puzzle

Fertility Policies and Social Security Reforms in China

An increase in the retirement age in China: the regional economic effects

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