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John Giles (World Bank - DECRG)
Dewen Wang (World Bank - Beijing & CASS-IPLE)
Fang Cai (CASS - IPLE)
The Current and Future Well-Being of China’s Rural Elderly
China’s Aging Rural PopulationChina’s demographic transition and implications for
its old age dependency ratio (OADR) are well-knownMigration to urban areas is primarily an activity of
the youngAs a result the OADR in rural areas is rising much
faster than in rural areas. We predict trend in the OADR based on different
assumptions for the total fertility rate and urbanization (migration) rate.
Under reasonable assumptions of a low TFR and medium urbanization, the OADR in rural areas will rise from 13.5 percent in 2008 to 34.4 percent by 2030
Trend in Old Age Dependency Ratio in Rural and Urban China
0
10
20
30
4020
08
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Old
Dep
ende
ncy
Rat
io (%
)
Rural Urban
Low TFR, Medium Urbanization
International Comparisons of Old-Age Dependency Ratio
Other countries had pension systems covering the rural population in place long before the population started to age:Denmark (1891), UK (1946), Japan (1971), South Korea
(1990)
0.0
10.0
20.0
30.0
40.0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Old
Ag
e D
ep
ed
en
cy
RA
tio
s (%
)
China Japan South Korea Denmark UK
What are the Sources of Support for China’s Elderly?
Compared to urban residents, the rural elderly:Have relatively low savingsLack pension supportRely on support from family members or own
labor
Is Declining Co-Residence with Adult Children a Sign of Less Support?
Living Arrangements of Elderly and Location of Children (2004)
by Age
02
04
06
08
01
00
Pe
rce
nt o
f Eld
erly
60 70 80 90 100
Age of Elderly
Living Alone, but Child(ren) in Village Living w/ Adult Child(ren)
Child(ren) in Either Village or Household
Source: RCRE 2004 Supplemental Rural Household Social Network, Labor Allocation and Land Use Survey.
Living Arrangements of China’s Rural Elderly
Source: China Health and Nutrition Survey (CHNS).
0
.2
.
.
.
Sha
re o
f Eld
erly
E
lder
ly
1990 1995 2000 2005 Year
Live with Adult Child (and Others) Live with Spouse (or Others) Live Alone
Are Elderly with Migrants Less Likely to Receive Financial Support from
Children?
Net Transfers Received by Rural Elderly by Migrant Status of Adult Children
-50
00
500
1000
1500
Ne
t Tra
nsfe
r
0 2000 4000 6000Pre-Transfer Income
Estimated Transfer 99 % Confidence IntervalPoverty Threshold
No Migrant Children2000-2003
1/4 1/2 1 2 4
-50
00
500
1000
1500
2000
Ne
t Tra
nsfe
r
0 2000 4000 6000Pre-Transfer Income
Estimated Transfer 99 % Confidence IntervalPoverty Threshold
Has Migrant Children2000-2003
1/4 1/2 1 2 4
How has Employment Status of the Elderly Changed Over Time?
Employed Share of Elderly by Age
Men
0.2
.4.6
.81
Sh
are
50 60 70 80 90Age
1993 19982003
Women
0.2
.4.6
.81
Sh
are
50 60 70 80 90Age
1993 19982003
Source: RCRE 2004 Supplemental Rural Household Social Network, Labor Allocation and Land Use Survey.
Is Migration of Children Associated with “Delayed Retirement”?
Women over 70 appear more likely to work.
Negative relationship between employment and determinants of wealth or permanent income (own education, and education of others)
Negative relationship between receipt of pension income and work
What Factors Affect Labor Supply Decisions of the Elderly? (dependent variable: engaged in productive activities during the year)
Linear Model
Model Age 60 to 70 Age 70 to 80
Men Women Men Women Has Migrant Member 0.009 0.058 0.010 0.081*** (0.041) (0.046) (0.046) (0.032) Years of Education -0.005 -0.016*** -0.013*** -0.012** (0.004) (0.005) (0.004) (0.006) Years of Education of Other HH Members
-0.017*** -0.020*** -0.018*** -0.015*** (0.005) (0.005) (0.005) (0.004)
ADL Z-Score -0.113*** -0.079*** -0.103*** -0.049** (0.029) (0.026) (0.022) (0.020) Income from Pension/1000
-0.083*** -0.064*** -0.084*** -0.060*** (0.012) (0.012) (0.011) (0.010)
R-Squared 0.237 0.287 0.261 0.179 Observation 483 586 705 818 Source: China Health and Nutrition Survey (1991, 1993, 1997, 2000 and 2004). Definitions: Migrant Family Member: a member of the household from a previous round is no longer a household member and has moved outside of the home county. All models include age, age-squared, household demographic variables (number of household members over 60, number of children less than 3, children 3 to 7, children 7 to 13, children 13 to 16, spouse present), and year dummy variables interacted with regions to control for province-wide macroeconomic effects. *, **, *** indicate significance at the 10, 5 and 1 percent, respectively
Potential Policy Responses to Aging Rural PopulationPension or Dibao?A Rural Pension?
Current Participation in Rural Pension Programs is Low
Rural Population Participation Rates in Contributory Pension Schemes
0
2
4
6
8
10
12
14
16
18
1994 1996 1998 2000 2002 2004 2006 2008
Participation Rate (%) of Working AgeRural Labor Force
Potential Policy Responses to Aging Rural PopulationPension or Dibao?A Rural Pension?
Current Participation in Rural Pension Programs is Low
New Pension Initiatives:State Council Goal of Social Pension System by
2020In Planning Stage, Rural Pilot in 10 Percent of
Rural Counties Covering 10 Percent of Rural Population: Basic Account plus Individual Account
With Migration and Urbanization, Do Separate Pension Systems Make Sense in the Long-term?