Does the New Rural Pension Scheme crowd out private transfers from children to parents? Empirical evidence from China
China Agricultural Economic Review
ISSN: 1756-137X
Article publication date: 30 July 2018
Issue publication date: 3 June 2019
Abstract
Purpose
The purpose of this paper is to examine the effect of New Rural Pension Scheme (NRPS) on the private transfer behavior of the non-co-resident adult children to their elderly parents in rural China, and hence address the income redistribution effectiveness of public program for the elderly in rural China.
Design/methodology/approach
Pooled data from two waves of the China Health and Retirement Longitudinal Study and the combination of regression discontinuity design and difference in difference method are used to perform the analysis.
Findings
No evidence is found that pension payment from NRPS program does significantly crowd out the economic support from the adult children to their elder parents. The heterogeneous effects at different income percentile indicate that pension payment significantly increases the probability of receiving gross transfers and likelihood of the net transfer being positive for those elderly individuals with low income; in particular, the distinctive “family binding” arrangement may dramatically contribute to increasing the probability of receiving private transfers for the pension recipients.
Originality/value
The empirical findings would have far-reaching implications for the efficacy of public transfer or re-distributive programs such as NRPS; for the rural elderly, in particular, the unique “family binding” mechanism under the NRPS program may have positive welfare effects on the intended beneficiaries. Furthermore, an understanding of the inter-linkage between informal arrangements of elderly support and social re-distributive program provides further insight into the design of social security systems targeted to the vulnerable group in developing countries.
Keywords
Acknowledgements
The authors gratefully acknowledge the financial support by National Science Foundation of China (Grant Nos. 71303050, 71770317), National Key R&D Program of China (Grant No. 2017YFC1601903) and Fujian Agricultural & Forestry University (Grant No. KFA17509A), and also appreciate the anonymous reviewers for valuable comments and suggestions. All remaining errors are of the authors.
Citation
Ning, M., Liu, W., Gong, J. and Liu, X. (2019), "Does the New Rural Pension Scheme crowd out private transfers from children to parents? Empirical evidence from China", China Agricultural Economic Review, Vol. 11 No. 2, pp. 411-430. https://doi.org/10.1108/CAER-02-2017-0019
Publisher
:Emerald Publishing Limited
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