The Choice Of Fertility And Retirement For The Old-aged Support Based On The Micro Perspective

Fertility, retirement and pension decision, are the crucial problems of every Chinese people need to face in life. It is rich in previous research. Research involves many fields such as demography, sociology, political science, economics and other fields, and it is an interdisciplinary subject. There is a great study space about intergenerational relationships under China’s cultural context, which is suitable to dig deeper into multiple angles from the economic efficiency and the emotional motivation and interaction behavior. This paper tries to break the traditional research paradigm by introducing description and analysis methods in finance, economics, behavioral science into the microscopic research framework of fertility and retirement decisions, and using CHARLS database that provides the high quality micro data, in order to explore the fertility and retirement decisions of micro-main behind the psychological foundation, motivation, and thought processes from family intergenerational relationships and family endowment perspective. Knowledge lateral migration and development helps us to describe the uncertainty and unreliability of depending on the intergenerational transfers. Considering the uncertainty of family transfers caused by the risk of investing children’s education, individuals evaluate the quantity and quality of fertility, which makes the limited effect of single two-child policy. The diffusion effect of Children’s responsibility caused unreliability of family old-age support. Therefore, more sons not necessarily bring more happiness. When the individual’s consumption can’t maintain his own consumption, he will tend to retire early even though his children have provided family transfers to him. Skip-generation raising should be regarded as an auxiliary behavior of their children when the individual is Enough to live comfortably. And then, the policy of delay retirement should consider both effects.Chinese society is facing more and more serious aging problem. There is large number of elderly people in China, according to the latest data released by the national bureau of statistics, by the end of 2014, the aging population climbed to 137 million, which is the percentage of above 10%; Population aging progress develops very quickly, from 1953 to 2010, China’s total population has increased 1.25 times, aging of population has increased 3.53 times, and the development speed of China’s ageing is significantly higher than the world average. At the same time, the long-term practice of family planning policy strictly control the birth rate, the level of medical and health care improve the increasing life expectancy, family fertility intentions of child-bearing age has undergone a fundamental shift from high to low with the development of social economy. These factors lead to children’s population accelerated decline, the proportion of working age is falling and the population age structure aging. Aging problem causes the social old-age security system under a lot of pressure, which is unable to meet the needs and maintain huge pension. Under the influence of the traditional Chinese Confucian culture, the mode of family support for elderly is still the main way relied by China’s elderly, and it can supplement the social old-age security system, but along with the family structure change and the development of social economy, the maintenance of the traditional intergenerational interactive relationship and the mode of family support for elderly is being challenged.In recent years, the government has introduced many policies, such as allowing couples to have two children if one of them is an only child, as well as the brewing delay retirement policy, in order to alleviate pressure of the social old-age security system caused by ageing problem. This conforms to the social expectations and the trend of The Times. However, from microcosmic individual level, each individual can take advantage of the opportunity to rethink how to make the family endowment resources and family endowment functions, in order to create opportunities to improve pension situation. This paper takes micro-main decision as a research perspective, because of the macroscopic policy must consider incentive compatibility to with micro individual. Whether it can give full of options for individual or not is an important standard of evaluating policy good or bad, especially for policy like birth, retirement which is closely related to each people vital interest. Moreover, it helps us to predict the effect of policy implementation by exploring and grasping the decision of microcosmic individual.The paper use micro data provided by CHARLS database, and combine with related theory and method such as economics, finance, microscopic metrology and behavioral science, from family intergenerational relationships and family endowment perspective, through inspection of the family intergenerational transfer mode, degree and effect, deep insight into the thinking process of family pension function depended on their offspring. On fertility policy relaxation and retirement policy change conditions, we study the family endowment way and the impaction of children family old-age support on the agent make decision about the number of the birth and retirement point selection. In this paper, the core chapter research contents and relevant conclusions are as follows:From the perspective of old-age support, Chapter 3 developed a model of an individual’s fertility decision and analyzed the effects of the level of income, the expectation of intergenerational transfers and the cognition to return and risk of education investment on fertility and education decisions, considering three paths for old-age support including saving, pension and fertility. Especially, we used the risk of education investment to specify the uncertainty of family old-age support. The conclusions show that an individual will bear more children and invest more on education, when he gets more income and anticipates every child will give him more support or when he considers he will get higher return from education investment. While he thinks of himself suffering a greater risk, he will invest less on education. Then, this paper used CHARLS data to test these conclusions. Overall, whether an individual chooses to bear more children for old-age support directly depends on the heterogeneity of individual cognition.Intergenerational interaction between the agent and children gets more fully study, but the research about impact of interaction between the children on agent endowment is little. Chapter 4 uses CHARLS in 2013 data, empirically studies the effect of interaction between the children in the family, by introducing a measure of non-uniformity of income between children, and identifies the cooperation strengthening effect and diffusion of responsibility. We find that there is diffusion effect of responsibility on the sibling behavior, and it has important influence for the elderly support from children. Results show that:first of all, both from the aspect of material support and spiritual happiness level, income inequality between children has a negative impact to intergenerational transfer. Children between income inequalities can lead the total amount of from children to parents transfer decline. And this shows the existence of diffusion effect of responsibility. Second, the more children, the more support for parents in the material level, but there is no help for mental well-being. Finally, the higher children’s total income, the more parents get the transfer from children, at the same time, it will reduce the anxiety of parents for income inequality.There are abundant literature researches about how the retirement delay will bring on changes of the pension security system, but we have paid little attention to the micro individual’s retirement decision. Chapter 5 explores how skip-generation raising and intergenerational transferring affect the individual’s retirement decision by survival analysis method using CHARLS data. Several conclusions were indicated. Firstly, individuals will postpone the timing of retirement responding to the intergenerational transfers from their children. Especially, this influence will be stronger if the agent is poor. Secondly, individuals will retire earlier when they need to take care of their grandchildren. Thirdly, considering the effects of economic and time simultaneously, economic effect is the most significant factor which causes people to delay the retirement age. Therefore, skip-generation raising encourages individuals’early retirement, while even if they can gain the old-age supports from children, they will continue to work in order to help their children looking after the next generation. We suggested governments should increase investment on education of the pre-school children in the future. At the same time, they should create the environment to stimulate children to support their elderly parents, which can improve the parents’welfare and help relieve the pressure of population ageing.Chapter 3,4, and 5 are based on the hypothesis of economic rationalism, from the perspective of family pension, we take the theoretical analysis and empirical test for the fertility and retirement decisions of individuals, and get the related conclusion under static analysis framework. Chapter 6 summarizes systematically the research results based on irrational perspective of time preference inconsistent pension retirement decisions, in order to e xpand the train of thought for the future research.This possible innovation of the paper has the following points:(1) Chapter 3 and 4 study family intergenerational relationships by introducing respectively the financial asset pricing theory and related concepts in the theory of industrial organization, and reflect the research advantage of knowledge lateral migration from the interdisciplinary subject perspective. (2) Chapter 4 expends the vertical intergenerational relationship between parents and children’s group, by opening the "black box" of children groups, and explores the impact of intergenerational interaction between children on family intergenerational transfer, identifies the cooperation strengthening effect and diffusion of responsibility. It opens up discussion on the issues about reliability of family endowment (3) Chapter 5 analyzes the effect of skip-generation raising and intergenerational transfers on retirement decisions relationships, and provides a useful perspective for predicting the effectiveness of delay retirement policy implementation.