Children, old-age support and pension in rural China

The purpose of this paper is to examine the substitute between social old-age insurance and adult children in providing old-age support, and estimate the effects of China’s old rural pension program (ORPP) on sex ratio.

Using data from China’s 2005 inter-census population survey and China Health and Retirement Longitudinal Study, this paper estimates the effects of children on rural parents’ take-up of pension program and the effects of having access to pension on old parents’ choice of resource for future old-age support. The effects of China’s ORPP on sex ratio are estimated using difference-in-differences identification strategy.

Peasants having sons are less likely to participate in pension program and each additional son and daughter significantly decreases their likelihood of participation. Moreover, the effect of sons is much larger than that of daughters. Peasants having access to pension are less likely to rely on their children for old-age support. The implementation of the ORPP moderately decreased sex ratio.

Implementing pension program in China’s rural area will probably affect rural people’s fertility behavior and thus be helpful in correcting sex ratio bias.

This paper first estimates the effects of having access to pension on old parents’ choices of providers of old-age support, and estimates the causal effect of rural pension on sex ratio using standard DID strategy.