China 's Social Insurance: Regional Differences And Economic Growth

The issue of social insurance matters the livelihood of people, thus it has become an important issue of social concern.In this paper, we study the provincial differences of social insurance and pension insurance, as well as its impact on economic growth. We have collected detailed data on social insurance income and expenditure across all China’s31provinces in the period of2000to2009, thus to give a comprehensive statistical description of the regional differences of China’s current social insurance. Empirical studies have found that the western region enjoys significantly higher level of social insurance and pension than the central and eastern regions. Regional economic development level, the elderly dependency ratio, the proportion of state-owned economy, and financial subsidies for social insurance all showed significant positive effect on the level of social insurance. The impact of foreign trade is significantly negative; the size of social insurance fund has no short-term impact on economic growth. Pension income and expenses are subject to foreign trade with a significant negative impact and financial subsidies, the level of urbanization, human capital have significantly positive impact on pension scale, as well as the elderly dependency ratio. Pension insurance wage replacement rate is mainly affected by the level of economic development, with per capita GDP and FDI significantly negatively correlated. The more developed the economy, the lower the pension replacement rate. In addition, the elderly dependency ratio is negatively correlated, ie when the contribution rate is fixed, the dependency ratio is higher, the lower the replacement rate of pensions. This study turns out that the level of economic development, the proportion of state-owned economy, opening-up policy and the aging population trend contributed the regional differences in social insurance.