Study Of Old-age Insurance System In Urban And Rural Employment

Due to historical reasons, there is great regional disparity in China's urban and rural areas, including the differences in economic development, income level and employment policies.The old-age insurance is also no exception. In the recent years, with the growth in the number of rural migrant workers in cities, more and more attentions have been paid to their participation in the old-age insurance. Through continuous reform and improvement, an insurance system including the urban pension insurance system, the new rural social pension insurance and pension insurance for the migrant workers has been set up, which aims to achieve full coverage till 2020. Great achievements have been made in China's old-age insurance through the reforms in the past several decades, with the coverage extending continuously. However, it still can not satisfy the need of coordinating the implementation of employment policies in urban and rural areas. The rural and urban differences and regional planning pension insurance system has become a barrier to the free labor flow, which goes against the optimizing allocation of human resources and the enhancement of productivity. The high payment level increases the labor cost of enterprises and decreases their global competitiveness, which leads to the insufficient demand for labor. What's more, it also distorts workers'consumption and leisure decision, thus impedes them from realizing their lifetime utility. The partition based on identity also goes against the construction of equal employment and competition in the labor market.This paper aims to explore the construction of an old age insurance system that can adapt to the coordinating the implementation of employment policies in urban and rural areas.First, based on the need of heterogeneous individuals and social welfare maximization, this paper discusses the appropriate levels of old age insurance and also does an empirical analysis using sampling data. We find a selectable level can expand the coverage while not influencing employment. This leads to the conclusion that we can substitute the current system with an integrated system which includes a selectable insurance level.We believe this system can not only satisfy the diversified insurance need of workers, but also benefit the establishment of a unified and equal labor market.Second, this paper analyzes the way to unify the urban pension system and the new rural pension system, which is the need of free labor flow and the migrant workers'aspiration to live out their life in retirement back to their hometown.Based on the principle of equal right and obligations and relative equality, we bring in the idea"nominal social pension account",and design the mechanism to integrate the pension system in the rural and urban areas. A pension system for the migrant workers which has selectable levels and can be transferred is also designed.Finally, we propose a unified and multilevel pension insurance system that can satisfy the coordinating the implementation of employment policies in urban and rural areas. The first level is the basic insurance for all residents which is compulsory and highlights income redistribution and social security. The second level is compulsory annuity with its level can be negotiated by employers and employees, which aims to enhance the living standard of senior citizens. The third level is non-compulsory commercial insurance and individual savings, which can provide better living standard for those who can afford. Government can give support according to the need of economic development. The fourth level is family support, which is mainly spiritual and acts as a complement to the modern old-age system. What's more, Subsistence allowances is also an important supplement to this multilevel pension system, which can provide income to those old aged who live under the minimum standard of living without the need of payment, and thus mitigate old-age poverty.