Working Paper Brief Report Version 2 This version is not peer-reviewed

The Impact of Fiscal Subsidies on the Sustainability of China’s Rural Pension Program

Version 1 : Received: 13 November 2019 / Approved: 14 November 2019 / Online: 14 November 2019 (11:17:55 CET)
Version 2 : Received: 14 November 2019 / Approved: 15 November 2019 / Online: 15 November 2019 (16:38:57 CET)

How to cite: Lin, B.; Zhang, Y.Y. The Impact of Fiscal Subsidies on the Sustainability of China’s Rural Pension Program. Preprints 2019, 2019110161 Lin, B.; Zhang, Y.Y. The Impact of Fiscal Subsidies on the Sustainability of China’s Rural Pension Program. Preprints 2019, 2019110161

Abstract

This paper studies the impact of fiscal subsidies on the sustainability of China’s rural pension system. We first provides an overview of China’s rural pension system and explains the formulas used to calculate the pension payments. We then examines how fiscal subsidies, in forms of basic pension, incentive pension, and matching subsidy, affect participation rates and individual contributions. Our study shows that the rural residents’ participation rates can be improved significantly by increasing basic pension or by providing incentive pension, but not by matching subsidy. However, none of these fiscal subsidies has significant effects on the amount of individual contributions. Overall, our results imply that incentive pension is an effective mechanism in encouraging rural residents to participate in the pension programs, but current level of matching subsidies are not sufficient enough to improve participation or increase contributions. Our study suggests the needs to increase the fiscal subsides in China’s rural pension system, and can provide useful implications in designing the effective pension system for rural residents.

Subject Areas

chinese pension system; new rural pension scheme (nprs); fiscal subsidies; incentive pension; matching subsidy

Comments (1)

Comment 1
Received: 15 November 2019
Commenter: Yvette Zhang
Commenter's Conflict of Interests: Author
Comment: 1. The author order should be Benxi Lin (first author), Yu Yvette Zhang (second author)
2. We also update Benxi Lin's email to his institutional email address
3. We corrected a mis-labeled table (last table should be Table 3 not Table 2)
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