Does Money Relieve Depression? Evidence from Social Pension Eligibility

31 Pages Posted: 18 Jul 2016

See all articles by Xi Chen

Xi Chen

Department of Health Policy and Management; Yale University - Department of Economics; Yale University - Yale Institution for Social and Policy Studies; IZA

Tianyu Wang

Beijing Jiaotong University

Abstract

We estimate the impact of receiving pension benefits on mental well-being using China's New Rural Pension Scheme launched in 2010, the largest pension program in the world. More than four hundred million Chinese have enrolled in the program, and the program on average amounts to one fifth of pensioners' earned income. We find a salient increase in pension benefits and poverty alleviation around the pension eligibility age cut-off. Employing an instrumental variable approach to a national sample of the China Family Panel Studies, our empirical strategy overcomes the endogeneity of pension receipt that prevents us from identifying the causal effect of income change on mental health as measured by the full version of CES-D and depressive symptoms. Results reveal a sizeable reduction in depression susceptibility due to pension income. The improvement in mental health is larger for vulnerable populations with financial and health constraints. We further discuss potential pathways through which pension may affect mental health.

Keywords: pension income, depression, mental health, older populations

JEL Classification: H55, I18, I38, J14

Suggested Citation

Chen, Xi and Wang, Tianyu, Does Money Relieve Depression? Evidence from Social Pension Eligibility. IZA Discussion Paper No. 10037. Available at SSRN: https://ssrn.com/abstract=2810428

Xi Chen (Contact Author)

Department of Health Policy and Management ( email )

60 College St
New Haven, CT 06520
United States

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Yale University - Yale Institution for Social and Policy Studies ( email )

77 Prospect Street
New Haven, CT 06520
United States

HOME PAGE: http://isps.yale.edu/team/xi-chen

IZA ( email )

Tianyu Wang

Beijing Jiaotong University ( email )

No.3 of Shangyuan Residence Haidian District
Beijing, 100089
China

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