Social pensions have the potential to bring considerable changes to extended families in many traditional societies where multiple generations co-reside. However, very little is known about the impact of pension on more complete dimensions of lives of the older population and extended families. There is little evidence on China that will become the world's most aged society in 2030. It is also challenging to distinguish the actual pension impact from other confounded factors, such as age and cohort related heterogeneity and anticipation effects. The overall aim of this project is to innovatively and rigorously evaluate the broader impact of social pension on pensioners, their extended families and their community in the developing context where poverty rate is relatively high and social safety net is largely absent for the older population.
We aim to provide policy makers with the knowledge base needed to design, implement, and upgrade rural pensions. To meet this aim, we examine income effect of pension (Aim 1), impact of pension on companionship and support in extended families and engagement in social networks (Aim 2), and the net impact of pension on subjective well-being and mental health (Aim 3). Specifically, Aim 1 investigates whether pension windfalls alleviate poverty, affect pensioners' consumption of basic goods, such as basic nutrients intake and medical care, and make hired services more affordable to elderly parents to substitute for labor-intensive household chores, intensive care and other forms of instrumental support provided by their adult children.
Aim 2 studies changes in intergenerational relationships and social ties due to pension windfalls. We examine to what extent pensioners' income independence frees up adult children's occupational choices, migration, living arrangements, reduces intra-household transfers with elderly parents, and crowds out informal social insurance. Moreover, we examine how different binding constraints, such as liquidity constraint, health constraint, public infrastructure, mediate heterogeneous pension impacts.
Aim 3 evaluates the net impact of pension on subjective well-being (SWB) and mental health of the older population. We focus on heterogeneous effects in sub-populations by age profile, SES, poverty status, education, physical health, minority status, and access to public infrastructure. Estimating the differential impacts will provide new directions for understanding the mechanism linking pension windfalls to well-being of pensioners and aid policymakers in determining the resources needed and specific population targets in order to generate desirable policy outcomes.
All aims utilize the best available methods and multiple Chinese datasets and combine expertise from a group of health scientists and economists who have rich experience with the data and set of research questions to produce new evidence with the ultimate goal of developing policy responses that target the most vulnerable sub-population.
This application includes a set of projects that will utilize multiple datasets and empirical methodologies in order to examine the causal impact of pension windfalls on consumption, intergenerational and social relationships, and subjective well-being and mental health of the older population. We focus on utilizing large China datasets and quasi-experimental methods, such as the Regression Discontinuity Design and Difference-in-Differences, to separate sources of confounding factors that plague present research. The findings will be important both in presenting a more complete picture of the pension impact on behavior and well-being of the older population, their extended families and the communities where they reside and in understanding how heterogeneous pension impacts are generated and mediated by various constraints.
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