The Level Of Pension Benefits And Regional Economic Growth

Pension system is an essential part of the social security system, not only acting as the social stabilizer, but also exerting important impact to economic growth. As far as it started, public pension in China has had a close relationship with the macro-economical reform, and economical efficiency has been regarded as an index of the system designing.Just as regional large gap of economic development, public pension has varied a lot from the eastern, western and central area in China. Does the 'High Wage, High Welfare' in the western area really increase the households' consumption and push the economic growth? Similarly, what about the impact of lower old age insurance expenditure in central area?In this paper, both theoretical analysis and metric method are used to research the relationship between pension level and economic growth in different areas. Theoretical models are setup firstly to show the main economical mechanism of pension system, and based on Chinese 31 provincial panel data of total social insurance and pensions for retired and resigned persons, we study the regional differences of pension level and economic growth rate. The results show that a long-term relationship exists between the key index of pension, the pension per capital, and the real GDP growth rate per capital in eastern and western area. The contribution of social security to economic growth is larger than others'. However, there's no distinct relationship between the two in central area, which means a well-running mechanism does not act in central area. The study may help us to reach a better understanding of the development and reform of public pension in different areas, and thus from a total aspect adjusting measures based local condition is necessary when improving our pension system.The first chapter briefly introduces the theory of Social Security, and giving a general idea about the main two kinds of mechanisms from public pension to economic growth.The second chapter gives a quick glance to the development and current stated of public pension in China, and more attention is paid to the regional differences in indexes such economical development, old age insurance expenditure, average wage.The third chapter gives a theoretical analysis to the relationship between pension and economic growth. The relationship between productivity, fertility and consuming-saving decisions of the households are discussed according to the theoretical model and current empirical research.Based on the previous analysis, in chapter four, four panel data musters are created, and con-integrated theory and error correction model are introduced to study the long-term equilibrium relationship between regional GDP per capital and the wage replacement rate. Finally, a comment about the regional pension system and its economic efficiency is made and some suggestions are given.