Labor Supply Responses to New Rural Social Pension Insurance in China: A Regression Discontinuity Approach

Zeyuan Chen (), Tommy Bengtsson () and Jonas Helgertz ()
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Zeyuan Chen: Lund University
Tommy Bengtsson: Lund University
Jonas Helgertz: Lund University

No 9360, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Transitioning into retirement is an under-researched phenomenon in developing countries. Largely, this is linked to a predominance of contexts where – in particular – the rural population remains outside the coverage of any formal pension system. In 2008, China introduced the New Rural Social Pension (NRSP), a program which by now covers the majority of the Chinese rural elderly. This paper examines the effects of the NRSP on the labor supply of the elderly in rural China. As pension benefit eligibility at the time of its implementation is conditional on age, a regression discontinuity design is applied to investigate the casual effect of the receipt of pension benefits on labor supply. Furthermore, as the NRSP is neither means-tested nor conditions on retirement, it induces a pure income effect on employment. Using data from the China Health and Retirement Longitudinal Study, a nationally representative data set, we find that the receipt of pension benefits increases the probability of retirement among the rural elderly by around 15%.

Keywords: China; New Rural Social Pension; labor supply; regression discontinuity; retirement (search for similar items in EconPapers)
JEL-codes: H55 J26 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-09
New Economics Papers: this item is included in nep-age, nep-cna, nep-ias and nep-lma
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Citations: View citations in EconPapers (7)

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