An increase in the retirement age in China: the regional economic effects

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. China"s pension system is in need of comprehensive reform in that it is fragmented in its coverage and significantly under-funded. One measure which has featured in various reform proposals and on which we focus in this paper is to increase the retirement age. Since demographics and industry structure differ considerably across the regions in China, it is likely that a change in retirement age will have significantly different effects across China"s regions. Inter-regional disparities are already very substantial in China and it will be important to know whether changes in pension arrangements will widen or narrow these disparities. It is the object of the research reported in this paper to throw light on this question. To do this we construct a small two-region theoretical model having some Chinese characteristics. We linearise the model and solve it numerically using parameter values derived from Chinese data. We run four experiments, all involving an increase in the retirement age from 60 to 61. The simulations differ according the use made of the extra revenue generated by the policy. All four policies increase welfare and reduce the interregional welfare gap. However, the effects on other, more visible, measures of inter-regional gaps (such as income and output) are less clear and might generate resistance to the policy change, especially by the skilled who generally face reduced wages and income and have to work longer. (about 230 words) Terms of use: Documents in

Informal care provision across multiple generations in China

“…At the same time as demand is rising, the supply of informal care provision from grandparents is coming under pressure as the government is considering a major reform to increase the retirement age in the face of population ageing (Chen and Groenewold, 2017). If both mid-life women and men have to remain in the labour market for longer, fewer members of the sandwich generation will be available to provide informal care to either the younger or older generation.…”

“…Thus, a growing number of individuals in China face the possibility in mid-life of being ‘sandwiched’ between the provision of care to their own older parents/parents-in-law and also to their younger grandchildren. Understanding how this so-called ‘sandwich generation’ divides their resources in terms of time between the care of older and younger generations and other activities, including paid employment, is particularly pertinent in a context such as China, where the state remains predominantly dependent on the family for the delivery of care for older people and infant/toddlers (Zimmer and Kwong, 2003; Cong and Silverstein, 2012), and where the government has recently indicated that it plans to increase the retirement age (Chen and Groenewold, 2017), with the result that in the near future, even more individuals in their fifties and early sixties may be faced with the need to juggle work and family responsibilities.…”

Economic Effect of Population Ageing and Pension Reforms

“…Принимая решение о повышении пенсионного возраста, правительство по-разному может распорядиться сэкономленными средствами. А. Chen, N. Groenewold [29] на примере Китая оценивают макроэкономические последствия двух вариантов: когда эти деньги направляются на финансирование других расходов или на увеличение пенсий (либо снижение взносов). Было установлено, что повышение пенсионного возраста в любом варианте приводит к росту благосостояния граждан, увеличению выпуска и снижению неравенства (как между регионами, так и между гражданами), при этом положительный эффект выше во втором варианте, когда увеличение пенсионного возраста сопровождается ростом пенсионных выплат.…”

How private sector participation improves retirement preparation: A case from China

“…James (2002), and Sun and Suo (2007) note that accumulated savings and private insurance solutions should fill the protection gap of the Chinese public pension, which alone is considered insufficient if the aim is to cover all residents. A few models for analysing reform options for the Chinese public pension system are developed, accompanied by simulations based on macroeconomic statistics, for example Yang (2009), Song et al (2015), and Chen and Groenewold (2017). Wang et al (2014b) empirically estimate the (expected) pension fund gap of China in 2013, 2020, and 2050 based on macroeconomic statistics, and highlight the risk of a Chinese fiscal crisis in the long run.…”

“…Existing studies on Chinese retirement preparation use macroeconomic statistics to assess public pension programmes, for example Wang et al (2014a), or use a modelling-simulation approach to derive policy implications on pension reforms, for example Wang et al (2014b), Song et al (2015), and Chen and Groenewold (2017). 5 This study is the first to consider preparation for retirement in China at the microeconomic level.…”