The Affect Mechanism Of Social Security System On Labor Supply

China has the greatest population of the world, thus has abundant labor resource. However, China is going to an era of labor shortage. In the lower end labor market, supply exceeds demand while in the higher end, especially concerning the skilled labor, things happen in an opposite way. The structural conflict is becoming a bottleneck of economy growth. It is critical whether we can break the bottleneck and maintain our endowment advantage to our structural transformation and persistence development.The issues of labor supply include quantity, quality and location of supply etc. Social security system has a magnificent effect on labor supply. A well-designed system could help motivate working passion, encourage labor to move to sectors with greater productivity and help enhance the level of one's manpower. Social security system is a general concept which involves several protection programs, each of which influence the labor supply in different ways. In this article, I shall study the influence mechanism of different aspects of social security system on labor supply and try to prove that a better system can optimize labor supply in different aspects. On the other hand, concerning China's prevalent social security system, I shall make an empirical study and make a systematic analysis of the actual effects the system has on labor supply. The conclusion will be though our prevalent system is good for labor supply, there are still some institutional deficits. At last, political advices shall be given to help enhance social security system.This article can be divided into five sections:introduction, theoretical analysis, empirical analysis, political advice and conclusion. Introduction (Chapter 1) brings in the issue I am about to study and make general statement about relative concepts, innovation and method. Theoretical analysis:at first I shall make a general analysis about the literatures studying the social security system, labor supply and their relationship (Chapter 2); then I shall choose the pension insurance and health insurance as example to study their effects on location and quality of labor supply and get some results (Chapter 3). The empirical analysis (Chapter 4) concerns about China's prevalent social security system and looks into the actual influence of pension insurance and health insurance. The political advice part (Chapter 5) gives some plan and advice on how to design a better social security system to optimize labor supply. The conclusion part makes a summary about the main content and conclusion, and point out the shortage of this article and amendment needed to make.