Income Redistribution in Urban China by Social Security System: An Empirical Analysis Based on Annual and Lifetime Income

Lixin He and Hiroshi Sato ()

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This study investigates the redistributive effect of the social security reform in urban China using the nationally representative urban household surveys in 1995 and 2002. The main findings are as follows. First, public pension is the main income for the elderly in urban China. Majority of people aged 60 and over (72% in 1995, 82% in 2002) have pension. Second, the social security system in urban China improved the income of low-income and older age groups and reduced the relative poverty rate. However, the redistributive effect did not offset the expanding income inequality, which resulted in the Gini coefficient of redistributed income in 2002 being higher than that in 1995. Third, during 1995 and 2002, both low income group and high income group get positive net benefit from social security system, but the net benefit is increasing with income. There is an adverse income transfer in social security system no matter measured on annual income or lifetime income. Fourth, assuming that the reformed policy were applied to public sector employees, the long-term redistributive effect of the pension system for the working population, as calculated using their lifetime income, would be larger.

Keywords: lifetime income; income redistribution; social security; pension; China (search for similar items in EconPapers)
JEL-codes: E21 H55 P43 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-age, nep-dev and nep-tra
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: INCOME REDISTRIBUTION IN URBAN CHINA BY SOCIAL SECURITY SYSTEM—AN EMPIRICAL ANALYSIS BASED ON ANNUAL AND LIFETIME INCOME (2013)
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