A Study of the Impact of Population Aging on Fiscal Sustainability in China

Liu, Qiongzhi; Zhao, Dapeng

doi:10.3390/su15065409

Cited by 2 publications

(3 citation statements)

References 22 publications

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“…The effective allocation of pension funds can improve the level of pension investment income, realize the maintenance and appreciation of pension funds, and resolve the pension payment risks brought about by the aging population [ 25 ]. However, the inhibiting effect of population aging on the sustainability of pension funds is more evident in economically backward areas [ 26 ]. In addition, the definition of government responsibility by the pension system significantly impacts the sustainability of pension funds [ 27 ].…”

Section: Literature Reviewmentioning

confidence: 99%

The geographical pension gap: Understanding the causes of inequality in China’s pension funds

Zhang

Wang

et al. 2023

PLoS ONE

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The sustainability of social pension insurance is of great significance in guaranteeing the essential life of the elderly and promoting social stability. Based on the provincial panel data from 2012 to 2020, this study uses non-spatial measurement methods, ArcGIS visualization research methods, and geographic detectors to study the regional differences in China’s pension fund balances and the underlying influencing factors. Compared with the traditional way of establishing regression equations to explore the correlation of influencing factors, geographic detectors can quantify the strength of each influencing factor and detect the interaction of different influencing factors. This study found that: First, the growth rate of China’s overall pension fund balances has been declining yearly, with the fastest decline in northeast China, the middle in the Western and Central regions of China, and the slowest decline in Eastern China. Second, the spatial distribution of pension fund balances shows agglomeration characteristics, with high-value areas mainly distributed in Eastern China and low-value regions distributed primarily in Western and Northeastern China. Third, the overall Theil index for pension fund balances is trending down, but the Theil index for the Eastern region is on the rise. Fourth, seven factors, including the working-age population, the population aged 65 and above, and regional GDP, are the main factors that lead to regional differences in the balance of urban and rural residential insurance funds. Finally, the superimposed effects of each element are reflected in double-factor enhancement or non-linear enhancement relation.

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Section: Literature Reviewmentioning

confidence: 99%

The geographical pension gap: Understanding the causes of inequality in China’s pension funds

Zhang

Wang

et al. 2023

PLoS ONE

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“…and Zhao, D.P. [35], we refer to Aristovnik's indicator of fiscal burden to represent fiscal sustainability as 1 −…”

Section: Dependent Variablementioning

confidence: 99%

“…and Zhao, D.P. [35]. Some local fiscal data is sourced from the "Report on the Execution of Fiscal Budget and the Draft of Fiscal Budget" disclosed by the government, while central fiscal data is sourced from the annual "Central Final Accounts Report".…”

Section: Descriptive Statistics and Data Sourcesmentioning

confidence: 99%

A Study on the Effects of Tax Reduction Policies on Fiscal Sustainability in China

Liu

Zhang

2023

Sustainability

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Tax reduction policies can promote economic development, employment, and social equity in the short term. Especially during economic downturns, their effects are even more pronounced. Following the massive tax cuts amounting to 4 trillion yuan in China in 2022, the government work report for 2023 has revealed that tax reduction will continue to be the central theme of fiscal policies. However, amidst a backdrop of economic growth slowdown, China is facing objective challenges such as sluggish growth in fiscal revenues, rising inflexibility in fiscal expenditures, mounting debt burdens, and fiscal imbalances among regions, which pose severe threats to fiscal sustainability. This paper selects panel data from 30 provinces in China from 2009 to 2019. Controlling for provincial and year fixed effects, FGLS method is used to empirically test the impact of tax reduction policies on fiscal sustainability. The results indicate that tax reduction significantly undermines fiscal sustainability, which exhibits a certain degree of persistence. Heterogeneity tests reveal that tax reduction policies have more pronounced inhibitory effects on fiscal sustainability in western regions, regions with lower proportions of the tertiary industry, and regions with higher levels of fiscal decentralization. Further analysis demonstrates that tax reduction primarily impacts local fiscal sustainability through two channels: stimulating enterprise production and distorting local government behavior. Based on these findings, our study proposes the need to moderate the pace of overall tax reduction policies in China, implement tax reduction policies with varying intensities tailored to regional characteristics, and promote tax reduction policy dividends as well as reduce policy costs to enhance fiscal sustainability.

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A Study of the Impact of Population Aging on Fiscal Sustainability in China

Cited by 2 publications

References 22 publications

The geographical pension gap: Understanding the causes of inequality in China’s pension funds

The geographical pension gap: Understanding the causes of inequality in China’s pension funds

A Study on the Effects of Tax Reduction Policies on Fiscal Sustainability in China

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