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The impact of expected pensions on consumption: evidence from China

Published online by Cambridge University Press:  22 November 2021

Wei Zheng ,
Youji Lyu ,
Ruo Jia  and
Katja Hanewald Open the ORCID record for Katja Hanewald [Opens in a new window]
Wei Zheng
Affiliation:
Department of Risk Management and Insurance, School of Economics, Peking University, Beijing, China China Center for Insurance and Social Security Research (CCISSR), Peking University, Beijing, China
Youji Lyu
Affiliation:
School of Finance, Nankai University, Tianjin, China
Ruo Jia
Affiliation:
Department of Risk Management and Insurance, School of Economics, Peking University, Beijing, China China Center for Insurance and Social Security Research (CCISSR), Peking University, Beijing, China
Katja Hanewald*
Affiliation:
School of Risk and Actuarial Studies, University of New South Wales, Syndney, New South Wales, Australia Australian Research Council Centre of Excellence in Population Ageing Research (CEPAR), Syndney, New South Wales, Australia
*
*Corresponding author. Email: k.hanewald@unsw.edu.au
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Abstract

We study how pension participation and expected pension benefits affect working-age adults’ consumption based on a nationally representative dataset from the China Health and Retirement Longitudinal Study (CHARLS) during the period 2011–2018. We find that the consumption of working-age adults who participate in China's Residents' Basic Pension is 15.4% higher than that of non-participants. Furthermore, we find that if working-age adults' expected pension benefits increase by RMB 1, their consumption will increase by RMB 0.34. Overall, our findings suggest that pension expectations are critical to the consumption decisions of working-age adults and can, therefore, positively affect total domestic consumption.

Keywords

Agingconsumptionpensionretirement

JEL classification

D12: Consumer Economics: Empirical Analysis H55: Social Security and Public Pensions
Type
Article
Information
Journal of Pension Economics & Finance , Volume 22 , Issue 1 , January 2023 , pp. 69 - 87
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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