Research On The Economic Effects Of China's Rural Workers' Pension System

Brought the rural workers into the urban pension system is mainly for two reasons:Firstly, many scholars think absorbing rural workers into this system is helpful to relieve the imbalance pressure of urban pension payments. Secondly, with the accelerated urbanization process, more and more rural workers and rural residents will transform into urban residents, the establishment of rural workers' pension system is also the need of social development. At present, rural workers' pension system is in a local separatist state. This is because in the national level, there is no specific provision to rural workers'pension system. Thus there exit three models:the City Insurance Model represented by Shenzhen and Guangdong, the Lower Insurance Model represented by Beijing and Qingdao, the Compound Insurance Model represented by Shanghai and Chengdu. These three models are quite different from each other in the payment and receive of premiums, etc. When rural workers transfer in different cities, the rural workers'insurance premium can not be continued. Therefore, the enrollment ratio of rural workers'pension insurance is very low. The forthcoming policy "The scheme that rural workers participated in pension system", can fundamentally solve above-mentioned problems. Thereby the policy can protect the legitimate interests of rural workers and achieve social justice.This study on the issue of rural workers'pension system is mainly based on the following considerations:Firstly, "The scheme that rural workers participated in pension system" has put forward the idea that the rural workers'pension system will be brought into the urban pension system. The payment ratio has been brought about, but the rationality of the ratio is not clear. Secondly, many scholars believe that absorbing rural workers into pension system will help to relieve the pressure on China's pension payments. But they don't analyze the pros and cons of this policy quantitatively. Thirdly, by analyzing the impacts of rural workers'pension system on the rural workers and the urban labor force employment, wages and social welfare, we can quantitatively investigate the advantages and disadvantages of this policy, and put forward appropriate policy recommendations.In the existing literature studies, there are many researches on policy and institution, which are mainly descriptive qualitative research and lack of quantitative research. Although the rural workers'pension system perform as a policy, but in the process of its implementation, it will involve all aspects of society, including:employment, income, equity, fiscal and social welfare, etc. So that when we evaluate a policy, we must consider its economic effect at the meantime. Therefore when we study the issue of rural workers'pension system, we should not only investigate the impact on the rural workers themselves, but also focus on quantitative analysis on the economic effect of the rural workers' pension system. We should investigate the feasibility and the scientific of the pension insurance quantitatively and qualitatively. Foreign scholars have done a little research on the Chinese rural workers'pension insurance, but done a lot research on the impacts of international migration on domestic labor markets and pension insurance system by constructing models. It has a certain reference value to the research on the issue of rural workers migrating to cities.In the specific research methods, this paper draws on research methods of domestic and foreign scholars, analyzes the economic effect of the rural workers' pension system quantitatively and qualitatively. This paper builds a two-period model to analyze payment ratio and pooling ratio of the rural workers'pension system. The pension system effects of bringing rural workers into the urban pension system are estimated by the actuarial analysis. When studying the impact of rural workers'pension system on the urban labor market, this paper develops a general equilibrium framework of the two-period model. This paper analyzes not only the impact of the elimination of discrimination in employment of rural workers on urban labor markets, but also the impact of the implementation of rural workers'pension insurance on the social welfare.The main conclusions in this study are drawn in the following:Firstly, the payment ratio is limited to the payment ability of rural workers and enterprises, and their reasonable ranges are 7.3% and 15.9% respectively. The PAYG system is in the interests of the rural workers. "The scheme that rural workers participated in pension system" provides that the enterprises'payment ratio is at 12% of base pay, and individual payment ratio is 4-8%, which are reasonable.Secondly, the aging fact will bring bad impacts to the urban pension system, and the receipt and payout of the year will be negative firstly in 2039. The joining of rural workers will help to change the age structure of the urban population, which can delay the payment of the funding gap, and share the transition costs of China's pension reform from time. Thereby absorbing rural workers into pension system can relieve the pressure of pension funding gap from the amount and timing dimensions. Therefore it can solve the problem of the pension funding gap in the short time. Under the present framework, most rural workers who are the beneficiaries of pension system, are bound to bring the burden of pension system in the long time.So it also should be paid attention to set up a financial self-balancing mechanism of rural workers'pension to achieve its sustainable development.Thirdly, the implementation of rural workers'pension system is beneficial to eliminate employment discrimination of rural workers. The elimination of discrimination in employment of rural workers can not only greatly increase the wages of rural workers, but also make labor allocation more efficient, which can increase the total output of society, thereby create more employment opportunities. One the premise of urban labor supply's inelastic, the employment of rural workers will increase. The increased employment of rural workers will bring professional and technical workers'wages increased and non-professional and technical workers'wages reduced. This means that the wage premium rate will rise. More people will choose to invest in education. Thus the point of indifference in education investment extends, and the proportion of professional and technical workers increases. Meanwhile, the implementation of the rural workers'pension system will increase the social welfare of rural workers and urban workers, thereby improve the welfare of whole society. In other words, the rural workers' pension system will have a positive effect to the whole society welfare.The main innovations of this paper are the following:Firstly, many domestic scholars study the affordability of urban workers and enterprises and urban workers'preference to pension system. But a few scholars specialize in the affordability of rural workers and their enterprises. This paper put forward to the suggestions for rural workers'pension insurance by identifying the affordability of the enterprises of rural workers and the preference of rural workers on pension system.Secondly, the existing studies by qualitative analysis conclude that rural workers'pension system may help to relieve the pressures on China's pension payments. But there is a few researches on analyzing the future payments status of rural workers'pension system. From the macro-and micro perspective, this paper analyze the impact of absorbing rural workers into pension system, and analyze the pros and cons of absorbing rural workers into pension system, then provide the basis to the suggestions for rural workers'pension system.Thirdly, in the past studies of rural workers'pension system, mainly investigated the impact of rural workers themselves, but not considered the impacts on the employment and wages of labor market and welfare of whole society. Therefore on the basis of a series of assumptions, this paper analyzes the changes of urban labor market in labor force structure, wages and the consequent changes in social welfare in the case of eliminating discrimination against rural workers'employment. It provides a new perspective to study the rural workers' pension system in the future.