Income inequality among the old: evidence from China

Stream: Chinese social policy: poverty reduction
Date: Tuesday, 10 September 2019
Time: 10.55 am – 12.35 pm

Abstract

We develop a new method to analyze the transmission of income inequality starting from initial socioeconomic differences to pension inequality in old age. Our approach combines regression-based inequality decomposition and mediating effect analysis. We apply the method to analyze the income inequality among old Chinese using a panel of over 4,000 old households from the China Health and Nutrition Survey over the period 1991-2015. We conduct repeated cross-sectional and longitudinal analyses to isolate age effects from cohort effects and time effects. We find that the urban-rural gap, mediated by educational attainment, is the primary cause of the income inequality among the old. The income inequality is larger for the old than for the young, mainly because of China’s unfair public pension system. Our results suggest that the income inequality among old Chinese can be reduced by equalizing pension benefits and, in the long run, by equalizing the educational attainment of urban and rural residents.

Authors

Katja Hanewald (Presenter), UNSW Sydney, CEPAR
Katja Hanewald is a Senior Lecturer in the School of Risk and Actuarial Studies at UNSW Sydney and an Associate Investigator in the ARC Centre of Excellence in Population Ageing Research (CEPAR). Her research addresses risk management and insurance aspects of population ageing with a focus on China. Her current research investigates optimal retirement financial decisions of older households in China and the design of retirement financial products such as reverse mortgages, long-term care insurance and annuities. She obtained her PhD in Economics from Humboldt-Universität zu Berlin in November 2010.

Ruo Jia, Peking University, School of Economics
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 the 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 and of the Board of Governors of the Asia-Pacific Risk and Insurance Association. He graduated from the University of St. Gallen in Switzerland with a Ph.D. in Finance.

Zining Liu, Peking University, School of Economics
Zining Liu is a PhD Candidate in the Department of Risk Management and Insurance, School of Economics, Peking University. She specializes in pension economics and health economics. She has published one article in the Geneva Papers on Risk and Insurance - Issues and Practice. She will graduate from the School of Economics, Peking University with a Ph.D. in Applied Economics.