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Explaining low employment rates among older women in urban China

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  • Wenchao (Michelle) Jin

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

Abstract

In China, the employment rate among middle-aged and older urban residents is exceptionally low. For example, 27% of 55-64-year-old urban women were in work in 2013, compared to more than 50% in UK, Thailand and Philippines. This paper investigates potential explanations of this low level of employment in urban China. I document the stylized fact that a majority of individuals stop working as soon as they qualify for a public pension, which most often happens at age 50 for women. I also highlight the presence of signi cant amounts of financial and time transfers between generations. I provide descriptive evidence that transfers from children are responsive to parental incomes, and that mother's labour supply is aff ected by the expectation of transfers from her children. I then built and calibrate a life-cycle model of labour supply and saving. I fi nd that both the pension system and transfers from children have large eff ects on female labour supply. Increasing the female pension age from the status-quo to 60 would raise the employment rate of 50-59 year old women by 28 percentage points.

Suggested Citation

  • Wenchao (Michelle) Jin, 2016. "Explaining low employment rates among older women in urban China," IFS Working Papers W16/24, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:16/24
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    References listed on IDEAS

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    1. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
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    3. Cai, Fang & Giles, John & Meng, Xin, 2006. "How well do children insure parents against low retirement income? An analysis using survey data from urban China," Journal of Public Economics, Elsevier, vol. 90(12), pages 2229-2255, December.
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    5. Felix Salditt & Peter Whiteford & Willem Adema, 2007. "Pension Reform in China: Progress and Prospects," OECD Social, Employment and Migration Working Papers 53, OECD Publishing.
    6. Zachary Zimmer & Toshiko Kaneda & Laura Spess, 2007. "An Examination of Urban Versus Rural Mortality in China Using Community and Individual Data," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 62(5), pages 349-357.
    7. Loraine West, 1999. "Pension reform in China: Preparing for the future," Journal of Development Studies, Taylor & Francis Journals, vol. 35(3), pages 153-183.
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    Cited by:

    1. Deng, Yuanyuan & Fang, Hanming & Hanewald, Katja & Wu, Shang, 2023. "Delay the Pension Age or Adjust the Pension Benefit? Implications for Labor Supply and Individual Welfare in China," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 1192-1215.

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    Keywords

    employment; employment rates; China;
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