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Does Money Relieve Depression? Evidence from Social Pension Eligibility

Listed author(s):
  • Chen, Xi

    ()

    (Yale University)

  • Wang, Tianyu

    ()

    (Beijing Academy of Social Sciences)

Registered author(s):

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10037.

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Length: 31 pages
Date of creation: Jul 2016
Handle: RePEc:iza:izadps:dp10037
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