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Redistribution Effect and Pension Choice: Theory and Evidence

25 Pages Posted: 20 Mar 2017 Last revised: 23 Apr 2017

Hulai Zhang

Peking University

Date Written: June 1, 2016

Abstract

This paper mainly focuses on two issues, the factors influencing pension choice and the redistribution effect of the pension system in China. Our model studies the trade-offs of relative financial benefits and risks provided by various plans, as well as the accessibility to specific pension plans and accessibility to information on pensions. The features examined include individual features such as hukou, gender and education, family features like marital status and work features like job types. By analyzing these features, we find that features of individual, family and work have significant impacts on the choice of pensions. Consistent behavior on pension choice also appears to exist within a family. Moreover, the results indicate that education and physical health of family members have a positive effect on each other's pension behavior. The above results appear to be consistent with the prediction of our model. Finally, we take the Newly Rural Social Pension (NRSP) as an example to study the existence of redistribution effect. The effect is found between people with different income level and gender, and the direction of the redistribution is from people with higher income to those with lower income, from male to female.

Suggested Citation

Zhang, Hulai, Redistribution Effect and Pension Choice: Theory and Evidence (June 1, 2016). Available at SSRN: https://ssrn.com/abstract=2935381

Hulai Zhang (Contact Author)

Peking University ( email )

School of International Studies
Beijing, 100871
China

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