BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Public pension and household saving: Evidence from China
(), Lixin He and Hiroshi Sato
Abstract: We relate household saving to pension reform, to explain
the high household saving rates in urban China from a new perspective. We
use the exogenous – policy induced - variation in pension wealth to
explicitly estimate the impact of pension wealth on household saving, and
obtain a significant offset effect of pension wealth on household saving.
Our estima-tions show that pension reform boosted the household saving rate
in 1999 by about 6 per-centage points for cohort aged 25-29 and by about 3
percentage points for cohort aged 50-59. Our results also indicate that
declining pension wealth reduces expenditure on educa-tion and health more
than on other consumption items.
Keywords: pensions; pension reform; household savings rate; China; (follow links to similar papers)
JEL-Codes: H31; H55; P35; (follow links to similar papers)
36 pages, April 20, 2009
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