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Can Social Security Boost Domestic Consumption in the People’s Republic of China?

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  • Wang Dewen

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    Abstract

    This paper reviews the development of the social security system and trends in the urban labor market in the People’s Republic of China (PRC). Despite its remarkable economic achievement, the PRC faces a difficult path before it can reform and improve its social security system and provide basic support for all of its people. The unemployment shock has caused rural and urban household income to decrease and has thus slowed down household consumption growth. The provision of broader social security would not only mitigate unemployment shocks in the short term, but it would also guarantee individuals and households more security for spending that could reduce the high savings rate and help achieve a balanced growth path in the long run. [ADBI WP 215].

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    Bibliographic Info

    Paper provided by eSocialSciences in its series Working Papers with number id:2490.

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    Date of creation: May 2010
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    Handle: RePEc:ess:wpaper:id:2490

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    Related research

    Keywords: people; unemployment; households; income inequality; children; insurance; medial; injury; Housing Security; consumption; growth; rural; individuals; savings rate; spending; public transfers; income distribution; development; social security system; urban labour market; China; PRC; economic; reform;

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    1. Marcos Chamon & Eswar Prasad, 2008. "Why are Saving Rates of Urban Households in China Rising?," NBER Working Papers 14546, National Bureau of Economic Research, Inc.
    2. Alan B. Krueger & Bruce D. Meyer, 2002. "Labor Supply Effects of Social Insurance," NBER Working Papers 9014, National Bureau of Economic Research, Inc.
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    10. John Giles & Kyeongwon Yoo, 2007. "Precautionary Behavior, Migrant Networks, and Household Consumption Decisions: An Empirical Analysis Using Household Panel Data from Rural China," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 534-551, August.
    11. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 96(383), pages 722-40, September.
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    13. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, American Economic Association, vol. 82(1), pages 15-33, March.
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