Research On The Influence Of China’s Pension Insurance System On Urban Residents’ Consumption Behavior

China’s urban consumption rate is continuously declining while urban householdsavings rate has been all the way up and high in recent years. So this paper expands itsstudying using consumption as a starting point. This paper quantifies the pensionmulti-track and uses data of China Household Finance and Survey for22provinces inyear of2010to construct tobit model for empirical analysis, based on the buffer-stocksavings theory, trying to explain the phenomenon. Introducing a dummy variable tomeasure whether the family owns the pension insurance into the paper and controllingthe uncertainty, the results both show that China’s imperfect pension insurance systemto some extent can explain insufficient consumption, which mainly reflected in twoaspects:①The exist of the pension multi-track;②Low coverage of pension insurance.Firstly，the pension "multi-track" system has a significant impact on household savingsbehavior. Compared to personnel at institutions, the corporate officers are more cautiousto consumption spending and occupy more intense precautionary savings motive. Thisis because personnel at institutes can enjoy superior pension system after retirement.Secondly, people who have higher pension insurance have higher consumption trendthan ones who have lower pension insurance. Families with more pensions have lessuncertainty and are willing to expend their money.Different kinds of spending are affected by pension insurance system in differentways. People’s spending on food, housing, transport and using has nature of necessitieson some extent, thus their elasticity is low. Chinese people always have high incomeelasticity because of face problem and can be significantly excited by the perfectpension system. For luxuries, for example, traveling, visiting friends and relatives andhealth protection, the income elasticity is higher than1and are apparently positivelyaffected by a good pension system. Now the commodities of entertainment both havethe nature of necessities and luxuries, whose expending has a relatively high incomeelasticity and will increase when the pension system improves.The empirical result provides a reasonable micro-level explanation for the rising ofthe urban household savings rate. Our imperfect pension system makes the urbanresidents reduce current spending and increase precautionary savings in order to preventuncertainty of future revenue and expenditure. On the one hand, residents of differenttypes of occupations enjoy different levels of pension systems. Personnel at institutions have a more stable and highly proportionate pension than corporate staffs, so that haveless cautious motivate. On the other hand, the pension coverage is so low that manyhouseholds enjoy no pension insurance system, which makes them more willing toincrease current savings during the prime of their life for future needs. Moreover,China’s imperfect pension insurance system has interactions with the increasing incomelevel. Personnel at institutions have a lower income elasticity of savings than corporatestaffs.