Redistributive Effects Of China's Pension System Based On Income And Wealth

Over the past four decades of the reform and opening-up,together with the rapid development of China's economy,the income level for Chinese households has been improved significantly.At the same time,issues such as widening income gap and wealth inequality,population aging,and poverty have become increasingly prominent.For a long time,the government has enhanced income distribution reform and has repeatedly proposed to improve the redistribution mechanism of the social security system and narrow the income gap of the whole society.As an important part of China's social security system,the old-age insurance system has a strong redistributive function,and its role in stabilizing economic and social development,alleviating poverty in the elderly,and moderating the income redistribution and wealth inequality of residents cannot be ignored.With reference to the data from 2013 China Household Income Project Survey(CHIPs)and 2016 China Family Panel Studies(CFPS),this dissertation analyzes the redistributive effects of China's pension system based on annual income,lifetime income and wealth.Firstly,this dissertation reviews the relevant literature and theory.On this basis,it analyzes the development and reform process of China's public pension system and theoretically clarifies the mechanism of the redistribution of China's pension system.Theoretical analysis shows that China's old-age insurance system can play the role of redistribution within and between generations,and it can moderate the income gap and wealth inequality.The social security contributions and pension benefits rules of China's public pension will change the residents' behavior of participation,retirement,and savings,and have an impact on the income and wealth accumulation.Therefore,the public pension system can not only have effect on the income redistribution on an annual basis,but also can redistribute income over the lifecycle.Moreover,the social security wealth formed by participating in the pension system will also have an impact on wealth levels and the distribution of residents' wealth.Secondly,based on the annual income,by using the Gini coefficient and MT index,the analysis shows that the pension system plays an important role in reducing the income gap in the nationwide: thanks to the pension system,the Gini coefficient of the national income inequality has decreased by 5.05%.For urban residents,the pension system has an obviously positive impact on narrowing the income gap.The redistributive effect of pension system for enterprise employees is the largest,followed by pension insurance for government departments and public institutions,and the lowest is urban residents' pension insurance.However,for rural residents,the pension system's positive effect on narrowing the income gap is weak.Among the income groups,the pension system does redistribute income from higher-income group to lower-income group.Among the age groups,income redistribution occurs through the transfer from working people and retired people.Cross-country comparison shows that the redistributive effect of China's pension system is better than that of developing countries,but is still far less than developed countries.Thirdly,based on the lifetime income,this dissertation calculates the present value of lifetime contributions,the lifetime benefits,and the net benefits.The result shows that China's pension system plays the role of redistribution within and between generations in the long run.Among the different income groups,the enterprise employees pension system redistributes income from higher-income group to lower-income group and has a strong intrageneration redistribution effect.Compared with the pre-reform,the redistributive effect of government departments and public institutions system has been improved.The urban and rural residents' pension system has no obviously positive intragenerational redistribution,and to some extent,the system redistributes income from lower-income group to higher-income group.Among the age groups,the system for enterprise employees and staffs in government departments and public institutions has the intergenerational redistribution from younger to older generations.While for urban and rural residents,the system has the intergenerational redistribution effect from the older generations to the younger generations.The result for different genders shows that women receive higher lifetime net benefits than men,and the pension system has a greater income transfer to women than men.Finally,based on the perspective of wealth,this dissertation analyzes the effect of China's old-age pension system on the wealth distribution.The result shows that the pension system reduces the wealth inequality for people who have social security wealth,and the Gini coefficient of residents' wealth inequality has decreased by 11.34%.While for all residents in China,the effect is smaller,and the Gini coefficient of the distribution of wealth has decreased by only 5.51%.Among the different wealth groups,the pension system transfers the wealth from higher wealth groups to the lower wealth groups,and reduces the inequality of wealth distribution dramatically.However,the wealth distribution effect of the pension system is much smaller in rural areas.For different genders,the equalization effect of social security wealth on male group is greater than that of female.The decomposition of Gini coefficient for residents' net wealth shows that the share of social security wealth in household wealth is very large,and has an equalising effect on the distribution of Chinese residents' total wealth.The urban-rural decomposition of Theil indices shows that the urban-rural difference in pension system plays a major role in the process of wealth inequality expanding.The innovation of this dissertation is mainly in two aspects,one is the diversity of research perspectives.The analysis is based on three perspectives of annual income,lifetime income,and wealth.This makes up for the limitations of the previous literature only from a single perspective.The second is the comprehensiveness of the research object.In a unified framework,this dissertation analyzes empirically redistribution effect of China's pension system in urban and rural areas,so the research is more systematic and comprehensive,and it can compare the differences of the redistributive effects in different systems,thus providing the policy basis for narrowing the gap between different systems.