Unemployment Insurance And Chinese Citizens’ Savings

China’s economic growth has been mainly reliant on export and investment for a long time, bringing about insufficient domestic demand. Nowadays, it is an imperative to adjust the motivation of economic growth to increase residents’ consumption so as to ultimately have domestic demand become the main motivation for economic growth as China’s economy is meeting the "new normal". The saving rate of Chinese citizens has always quite high, which impedes the growth of citizen’s consumption. However, social security can reduce the risk expectation of citizens in the future, so that the saving is can be reduced to enhance consumption. Unemployment insurance is an important part of social security system. It is significantly meaningful in studying its influences on citizen’s consumption. Based on precautionary saving theory, the influences of China’s unemployment insurance system on household savings and consumption will be studied theoretically and empirically in this paper.Chapter I. Firstly, the research background and meaning is firstly introduced. Besides, the structure and research content is briefly introduced. Secondly, the innovation points and deficiencies are explained.Chapter II. Precautionary saving theory is deduced from the development of saving theory and also briefly introduced. Then, the documents studying the relationship between social security and citizen’s savings based on precautionary saving theory at home and abroad are summed up.Chapter III. Based on buffer-stock model built by Carroll(1992), the random variables representing the unemployment and unemployment insurance benefit variables are introduced into his constraint conditions, thus new Euler equation is obtained. Afterwards, through iteration with Euler equation, the iterative equation deciding consumer’s intertemporal consumption is obtained. According to this equation, the numerical solution of consumption function is calculated with fixed-point theorem. Besides, by comparing it into the numerical solution of original model, it’s found that the consumption function of consumer is larger than the original value under the condition that the unemployment insurance benefit exists, which indicates unemployment insurance will reduce the consumer’s uncertainty in income in the future and the risk expectation in the days to come so that the consumption is increased while the saving is reduced.Chapter IV. To verify the conclusion of theoretical model in Chapter III, the influences of China’s unemployment insurance system on citizens’ savings and consumption are verified by building measurement model and the variable coefficient of measurement model is estimated with CHFS microscopic family’s cross-section data of CHFS in 2011 based on the unit of family. There is some conclusion reached on measuring result and theoretical model. Unemployment insurance plays the role of reducing household saving and enhancing consumption. Household unemployment insurance can reduce household saving rate by 8%.Through research in chapter III and IV, it’s found that China’s unemployment insurance system plays a realistic security effect. It can reduce citizen’s consumption and increase consumption. In chapter V, firstly, the research carried out in this paper is summarized. Secondly, the status of unemployment insurance system is summed up with the research data in chapter V. In consequence, it’s found that the coverage rate of China’s unemployment insurance is still low and there exists certain structural problem. Numerous non-formal employees in the city cannot be guaranteed, thus the unemployment insurance system cannot play a bigger role. Meanwhile, the paper gives the policy suggestions of expanding the coverage of unemployment insurance and reforming the subsidy mode of unemployment insurance according to the research. In the end, chapter V summarizes the shortages, as well as future study area.Through theoretical and empirical models, it’s found that China’s unemployment system plays a positive role in reducing Chinese citizen’s high saving and enhancing consumption. However, due to the low coverage rate of China’s unemployment insurance system for extensive employees, it’s restrained from playing a bigger role. Therefore, China’s unemployment insurance system should be improved to expand its coverage to let more employees enjoy the guarantee of unemployment insurance.