Short-Run Health Consequences of Retirement and Pension Benefits: Evidence from China

This paper examines the impact of the New Rural Pension Scheme (NRPS) in China. Exploiting the staggered implementation of an NRPS policy expansion that began in 2009, we used a difference-in-difference approach to study the effects of the introduction of pension benefits on the health status, health behaviors, and healthcare utilization of rural Chinese adults age 60 and above. The results point to three main conclusions. First, in addition to improvements in self-reported health, older adults with access to the pension program experienced significant improvements in several important measures of health, including mobility, self-care, usual activities, and vision. Second, regarding the functional domains of mobility and self-care, we found that the females in the study group led in improvements over their male counterparts. Third, in our search for the mechanisms that drive positive retirement program results, we find evidence that changes in individual health behaviors, such as a reduction in drinking and smoking, and improved sleep habits, play an important role. Our findings point to the potential benefits of retirement programs resulting from social spillover effects. In addition, these programs may lessen the morbidity burden among the retired population. (JEL H55, H75, I10, I12, I19, J26)