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Pension Coverage for Parents and Educational Investment in Children: Evidence from Urban China

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  • Mu, Ren

    () (Texas A&M University)

  • Du, Yang

    () (Chinese Academy of Social Sciences)

Abstract

When social security is established to provide pensions to parents, their reliance upon children for future financial support decreases; and their need to save for retirement also falls. We use the expansion of pension coverage from the state sector to the non-state sector in urban China as a quasi-experiment to analyze the intergenerational impact of social security on educational investments in children. With a difference-in-differences framework, we find a significant increase in the total education expenditure attributable to pension expansion. The results are unlikely to be driven by trends in medical insurance, wages, bonus income, and housing values. They are robust to the inclusion of a large set of control variables and to different specifications, including one based on the instrumental variable method.

Suggested Citation

  • Mu, Ren & Du, Yang, 2012. "Pension Coverage for Parents and Educational Investment in Children: Evidence from Urban China," IZA Discussion Papers 6797, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6797
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    References listed on IDEAS

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    Cited by:

    1. Jing You & Miguel Niño-Zarazúa, 2017. "Smoothing or strengthening the ‘Great Gatsby Curve’? The intergenerational impact of China’s New Rural Pension Scheme," WIDER Working Paper Series 199, World Institute for Development Economic Research (UNU-WIDER).
    2. Céline Bonnefond & Matthieu Clément & François Combarnous, 2015. "In search of the elusive Chinese urban middle class: an exploratory analysis," Post-Communist Economies, Taylor & Francis Journals, vol. 27(1), pages 41-59, March.
    3. Yuan, Cheng & Zhang, Lei, 2015. "Public education spending and private substitution in urban China," Journal of Development Economics, Elsevier, vol. 115(C), pages 124-139.

    More about this item

    Keywords

    gender difference; education expenditure; pension; urban; China;

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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