Does expected replacement rate at retirement affect the consumption of the unretired? Evidence from China

Stream: Chinese social policy: policy and ageing
Date: Monday, 9 September 2019
Time: 3.40 pm – 5.00 pm

Abstract

We carefully utilize empirical methods to test the impact of the pension system on unretired people’s consumption decisions based on data of the China Health and Retirement Longitudinal Study (CHARLS). Taking advantage of the expansion of public pension system in China between 2009 and 2012 as a quasi-natural experiment, we find that participating in public pension schemes does affect unretired people’s consumption, and this effect varies among different public pension schemes and consumption categories. Furthermore, concentrating on participants in the pension system, we find that higher expected protection level of the pension system has a positive effect on their consumption. Moreover, our results also indicate that the effect of expected protection level of the pension system on unretired people’s consumption changes as people get older, and this change also differs among different consumption categories.

Authors

Wei Zheng, Peking University
Wei Zheng is Chair and Professor of Department of Risk Management and Insurance, School of Economics, Peking University. His research interests include pension economics, social security, and insurance markets of developing countries.

Youji Lyu (Presenter), Peking University
Youji Lyu is a PhD candidate of Department of Risk Management and Insurance, School of Economics, Peking University. His research interests include social security, population aging, and contest design.

Ruo (Alex) Jia, Peking University
Ruo (Alex) Jia is an Assistant Professor and Senior Research Scientist in the Department of Risk Management and Insurance, School of Economics, Peking University. He specializes in insurance economics and has published articles in Journal of Risk and Insurance, Journal of Banking and Finance, Geneva Risk and Insurance Review, among others. He is a member of the Solvency Supervision Expert Advisory Committee of the China Banking and Insurance Regulatory Commission, a board of governor of the Asia-Pacific Risk and Insurance Association. He graduated from the Institute of Insurance Economics, University of St. Gallen in Switzerland with a Ph.D. in Finance.

Katja Hanewald, UNSW Sydney
Katja Hanewald is a Senior Research Fellow in the ARC Centre of Excellence in Population Ageing Research (CEPAR) at UNSW
Sydney, where she is developing the research program of CEPAR's Australia-China Population Ageing Research Hub. Her research
addresses risk management and insurance aspects of population ageing. Her current research investigates the design, pricing and
risk management of retirement financial products and optimal retirement financial decisions of older households in China. She
obtained her PhD in Economics from Humboldt-Universität zu Berlin in November 2010.