nep-cna New Economics Papers
on China
Issue of 2013‒07‒05
two papers chosen by
Zheng Fang
Ohio State University

  1. Intergenerational Transfer, Human Capital and Long-term Growth in China under the One Child Policy By Xi Zhu; John Whalley; Xiliang Zhao
  2. Expanding social insurance coverage in urban China By Giles, John; Wang, Dewen; Park, Albert

  1. By: Xi Zhu; John Whalley; Xiliang Zhao
    Abstract: We argue that the demographic changes caused by the one child policy (OCP) may not harm China's long-term growth. This attributes to the higher human capital induced by the intergenerational transfer arrangement under China’s poor-functioning formal social security system. Parents raise their children and depend on them for support when they reach an advanced age. The decrease in the number of children prompted by the OCP resulted in parents investing more in their children’s educations to ensure retirement consumption. In addition, decreased childcare costs strengthen educational investment through an income effect. Using a calibrated model, a benchmark with the OCP is compared to three counterfactual experiments without the OCP. The output under the OCP is expected to be about 4 percent higher than it would be without the OCP in 2025 under moderate estimates. The output gain comes from a greatly increased educational investment driven by fewer children (11.4 years of schooling rather than 8.1). Our model sheds new light on the prospects of China's long-term growth by emphasizing the OCP's growth enhancing role through human capital formation under the intergenerational transfer arrangement.
    JEL: J13 O11 O53
    Date: 2013–06
  2. By: Giles, John; Wang, Dewen; Park, Albert
    Abstract: This paper first reviews the history of social insurance policy and coverage in urban China, documenting the evolution in the coverage of pensions and medical and unemployment insurance for both local residents and migrants, and highlighting obstacles to expanding coverage. The paper then uses two waves of the China Urban Labor Survey, conducted in 2005 and 2010, to examine the correlates of social insurance participation before and after implementation of the 2008 Labor Contract Law. A higher labor tax wedge is associated with a lower probability that local employed residents participate in social insurance programs, but is not associated with participation of wage-earning migrants, who are more likely to be dissuaded by fragmentation of the social insurance system. The existing gender gap in social insurance coverage is explained by differences in coverage across industrial sectors and firm ownership classes in which men and women work.
    Keywords: Health Economics&Finance,Insurance&Risk Mitigation,Social Protections&Assistance,Pensions&Retirement Systems,Wages, Compensation&Benefits
    Date: 2013–06–01

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