Pension gap between the Chinese public and nonpublic sectors： evidence in the context of the integration of dual-track pension schemes

Wen Wang, Hongyu Shi and Qiang Li

International Review of Economics & Finance, 2023, vol. 85, issue C, 664-688

Abstract: Using the 2013, 2015 and 2018 waves of China Health and Retirement Longitudinal Study, this paper analyzes the pension gap between the public and nonpublic sectors and its evolution in the context of the 2014 reform, which is designed to integrate the dual-track pension system. Applying the decomposition method based upon unconditional quantile regressions developed by Firpo et al. (2009), we find that public sector retirees enjoy pension advantages over their counterparts in the nonpublic sectors across the distribution, ceteris paribus, and the advantage decreased between 2013 and 2015, then increased between 2015 and 2018 after the reform. Both the explained and unexplained differential have significantly contributed to the sectoral pension gap over time. Comparing 2015 with 2018, the contribution of the unexplained differential increases substantially across the distribution. This is partly due to the transitional arrangements that have been made to secure the pension income levels of public sector retirees, which left the fairness of the pension system unimproved after the reform. The advantages of public sector retirees in terms of human and political capital over their peers in nonpublic sectors serve as the main contributors to the explained pension gap, thus indicating that the differences in individual investment in the early stages of the lifecycle should be considered when explaining the sectoral pension gap.

Keywords: Pension gap; Public and nonpublic sectors; Unconditional quantile regressions; FFL decomposition (search for similar items in EconPapers)
JEL-codes: C21 D31 H55 J45 O15 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S105905602300031X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:85:y:2023:i:c:p:664-688

DOI: 10.1016/j.iref.2023.01.023

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().