Study on the Impact of Pension Insurance on Household Consumption

Yifan Zhang ()
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Yifan Zhang: Northwest University, School of Economics and Management

A chapter in Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025), 2025, pp 1389-1396 from Springer

Abstract: Abstract Against the backdrop of China’s aging trend, the sound development of the pension insurance system is becoming increasingly crucial within the social security framework. It is noteworthy that the consumption rate among Chinese residents remains low, and there is substantial room for enhancing the role of consumption in driving economic growth. This paper takes the pension insurance system as a starting point to explore its impact mechanism on household consumption behavior, while systematically reviewing the developmental history of China’s pension insurance system. It combines the life cycle theory with the overlapping generation theory to analyze how pension insurance can improve household consumption propensity through the two dimensions of income effect and wealth effect. Furthermore, this paper discusses its impact from three dimensions: pension insurance type, security level and policy adjustment. This paper finds that urban employee pension insurance is more effective in stimulating consumption than urban and rural resident pension insurance by combining previous articles; improving pension levels helps to enhance consumption capacity, especially in the middle and low-income groups.

Keywords: Pension Insurance; Resident Consumption; Income Effect; Wealth Effect; Life Cycle Theory (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-874-5_157

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DOI: 10.2991/978-94-6463-874-5_157

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