Study On The Macroeconomic Effects Of The Social Security Expenditure In China

The evaluation of macroeconomic effects of social security expenditure is a very important topic in both theoretical and experimental researches and has received high attention from the academia and government. Starting from the perspective of aggregate demand, this thesis established the theoretical analysis framework for the macroeconomic effects of social security expenditure theory. Based on the theoretical analysis framewor, an overall assessment of macroeconomic effects of social security expenditure can be established by testing the effects of China's fiscal social expenditure on the employment, income inequality, consumption and the economic growth sequentially, which can provide a certain valuable policy thought for making appropriate Social Security expenditure policies and related policy combinations.Time series methods were used to test the effects of China's social security expenditure on employment, urban-rural income gap, consumption, and economic growth in this paper.The basic conclusions are:(1) At the national level, there is a positive correlation between social security expenditure and the quantity of employment, the cointegration coefficient is 0.0908,so the social security spending promotion effect is very weak. At the provincial level, there is positive cointegration relationship between China's local fiscal expenditure on social security and the employment, but there are some differences in the effects on employment promotion due to the provincial and municipal social security expenditures. In the central east, especially in the eastern coastal provinces and municipalities, fiscal expenditure on social security has a certain role in promoting employment, but the promotion is not significant in the west.(2) Social security expenditure is positively correlated with the urban-rural income gap, moreover it's Granger cause of this gap, which means that the long term increase in social security expenditure has led to the widening income gap between urban and rural residents.(3) Social security expenditure is negatively correlated with consumption, and has no Granger effect on consumption, indicating that social security expenditure piles out the consumption, but is not the reason for the decline of the consumption. The main reason for people daring not to spend is due to the relatively large uncertainty of the future spending. (4) Social security expenditure is not the Granger cause of the economic growth, nor is the cause of the intermediate variables: physical and human capitals.Overall, China's macro-economic effects of social security expenditure was not significant. The thesis proposed the corresponding policy recommendations. First,speed up the reform related to the vital interests of the residents, raising transparency, especially a series of reforms in health, education, housing, employment, and pension. These reforms should be put in place as soon as possible in the premise of social stability to reduce the uncertainty of residents'expectation, so that the social security system can truly give people the sense of security, and ultimately achieve the purpose of expanding domestic demand. Second, improve the social security system as soon as possible, expand the scope of social security, so that the social security covers various of non-formal and flexible employed person, migrant rural workers and rural residents in small towns, and achieve the goal of establishing basic national institutional security, and promote the National co-ordination of the social security sub-project, and ultimately improve the social security system. Third, expansion of the scope of the social security must rely on the government's public financial promotion. Governments at all levels should give more consideration to people's livelihood, restructure of financial expenditure, controlling administrative costs, limiting performance projects, enlarging social security, and improving social security level. Fourth, governments at all levels should make full use of the abundant labor resources and vigorously develop education and training industry, especially help and train those disadvantaged groups actively, help them acquire new skills to enhance their ability to adapt to technological change, increase their employment choices, and then increase employment income, which help reduce the wealth disparity , expand spending and have economic recovery.The innovative ideas in this paper:(1) Try to establish a system theoretical framework for macro-economic effects of social security expenditure.Starting from the perspective of aggregate demand, paper explored the economic effects of carrying out the social security expenditure to maintain a fair and stable society and thus promote healthy economic development deeply and systematically. The paper provided comprehensive and systematic theoretical support and logic clues to the evaluation of macro-economic effects of social security expenditure based on experimental evidence.(2) The paper answers the questions about the effects of China's social security expenditure on employment, urban-rural income gap, consumption, and economic growth systematically within the theoretical analysis framework, and varied in research perspective on several issues. As a pioneering study, the research expanded the view of the macroeconomic effects of the social security expenditure; deepened the theory of China's social security expenditure system.According to the theoretical analysis framework,this paper studied the effect of social security on the employment, urban and rural income gap, consumption and economic growth, trying to expand the research perspective and research content:â‘ Employment effect.The social security expenditure and employment relationships experience research literature, ignoring the social security expenditure's direct impact on employment.This paper construct a simple analysis model to directly analysis employment and social security expenditure and other variables;â‘¡Iincome gap effect.So far , social security expenditure and income gap is on the theoretical level.This paper will from the empirical perspective to study the relationship between the social security expenditure and the income gap,â‘¢Consumption effect. Scholars at home and abroad respectively pay attention to the social security expenditure and uncertainty on consumption.This paper put the uncertainty and social security expenditure into an econometric model .â‘£Economic growth effect.In order to reflect social security expenditure to economic growth mechanism, and inspection middle pathway, this paper tried to break through the previous analysis methods, social security expenditure is not only medi- variable, but also as a direct factors affect economic growth.So put the social security and it's affects into a frame to empirical analysis, to fully reflect social security expenditure influence the economic growth pathway.(3) New research findings and policy implications.The study indicates that China's social security expenditure is positively correlated with employment, but is not Granger causality, and is negatively correlated with consumption, not Granger causality either; and is positively correlated with the urban-rural income gap, is Grange causality for income gap between urban and rural residents,and is not the Grange cause to economic growth. In general, the promoting effect of social security expenditure in China to economic is not obvious. The new policy implication is: appropriate application of social security expenditure policy, and other combined relevant policies can effectively control the macro-economic variables'operating conditions, especially the residents spending, employment capacity, urban-rural income gap, and economic growth. This study provided a theoretical basis and empirical support to the above argument.