Study Of Delayed Retirement

In recent years, countries around the world have delayed retirement in response to problemscaused by aging populations. Delay retirement is especially appealing to China. China hasexperienced a drastic change in the age-structure of its population, causing great tension indemand and supply in its labor market. As a result, families compete to invest more in humancapital. At the same time, endowment insurance is at risk due to insufficient funding.The discussion concerning delay retirement was started when the idea was hinted byMinistry of Labor and Social Security of the People’s Republic of China in2004. Proponentsargue that delay retirement is a necessity, for the problems caused by the aging population aretoo pressing to wait; Opponents claim that delay retirement only provides benefits at the expenseof employment. However, the discussion only became official after it was proposed in ThirdPlenum of the Chinese Communist Party.This paper presents evidence supportive of delay retirement. In particular, it emphasizes itsimpact on the age-structure of the population, the investment in human capital, the demand andsupply of labor, the funding of endowment insurance, the quality of post-retirement living, andthe promotion of gender equality. The paper also analyzes both the short-and long-term impactof postponing retirement age on employment. It shows that the policy could in fact reduce thetension in funding endowment insurance. The paper is organized as follows. First, I describe thechoices of the retired on re-employment and endowment insurance participation in Shandongprovince using a sampled data in August2012. Second, I analyze the reasons behind theresistance to the policy showed by both firms and individuals. Finally, I present several policyrecommendations based on lessons learned from the experiences of other countries which havedelayed retirement. My major recommendations are that (1) delay retirement brings about morebenefits than costs and it should be carried out as soon as possible,(2) a combination ofmandatory delay and voluntary delay could outperform a simple mandatory delay, and (3)well-designed incentives that encourage voluntary delay are needed.