John Giles (World Bank - DECRG)

Dewen Wang (World Bank - Beijing & CASS-IPLE)

Fang Cai (CASS - IPLE)

The Current and Future Well-Being of China’s Rural Elderly

China’s Aging Rural PopulationChina’s demographic transition and implications for

its old age dependency ratio (OADR) are well-knownMigration to urban areas is primarily an activity of

the youngAs a result the OADR in rural areas is rising much

faster than in rural areas. We predict trend in the OADR based on different

assumptions for the total fertility rate and urbanization (migration) rate.

Under reasonable assumptions of a low TFR and medium urbanization, the OADR in rural areas will rise from 13.5 percent in 2008 to 34.4 percent by 2030

Trend in Old Age Dependency Ratio in Rural and Urban China

0

10

20

30

4020

08

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Old

Dep

ende

ncy

Rat

io (%

)

Rural Urban

Low TFR, Medium Urbanization

International Comparisons of Old-Age Dependency Ratio

Other countries had pension systems covering the rural population in place long before the population started to age:Denmark (1891), UK (1946), Japan (1971), South Korea

(1990)

0.0

10.0

20.0

30.0

40.0

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Old

Ag

e D

ep

ed

en

cy

RA

tio

s (%

)

China Japan South Korea Denmark UK

What are the Sources of Support for China’s Elderly?

Compared to urban residents, the rural elderly:Have relatively low savingsLack pension supportRely on support from family members or own

labor

Is Declining Co-Residence with Adult Children a Sign of Less Support?

Living Arrangements of Elderly and Location of Children (2004)

by Age

02

04

06

08

01

00

Pe

rce

nt o

f Eld

erly

60 70 80 90 100

Age of Elderly

Living Alone, but Child(ren) in Village Living w/ Adult Child(ren)

Child(ren) in Either Village or Household

Source: RCRE 2004 Supplemental Rural Household Social Network, Labor Allocation and Land Use Survey.

Living Arrangements of China’s Rural Elderly

Source: China Health and Nutrition Survey (CHNS).

0

.2

.

.

.

Sha

re o

f Eld

erly

E

lder

ly

1990 1995 2000 2005 Year

Live with Adult Child (and Others) Live with Spouse (or Others) Live Alone

Are Elderly with Migrants Less Likely to Receive Financial Support from

Children?

Net Transfers Received by Rural Elderly by Migrant Status of Adult Children

-50

00

500

1000

1500

Ne

t Tra

nsfe

r

0 2000 4000 6000Pre-Transfer Income

Estimated Transfer 99 % Confidence IntervalPoverty Threshold

No Migrant Children2000-2003

1/4 1/2 1 2 4

-50

00

500

1000

1500

2000

Ne

t Tra

nsfe

r

0 2000 4000 6000Pre-Transfer Income

Estimated Transfer 99 % Confidence IntervalPoverty Threshold

Has Migrant Children2000-2003

1/4 1/2 1 2 4

How has Employment Status of the Elderly Changed Over Time?

Employed Share of Elderly by Age

Men

0.2

.4.6

.81

Sh

are

50 60 70 80 90Age

1993 19982003

Women

0.2

.4.6

.81

Sh

are

50 60 70 80 90Age

1993 19982003

Source: RCRE 2004 Supplemental Rural Household Social Network, Labor Allocation and Land Use Survey.

Is Migration of Children Associated with “Delayed Retirement”?

Women over 70 appear more likely to work.

Negative relationship between employment and determinants of wealth or permanent income (own education, and education of others)

Negative relationship between receipt of pension income and work

What Factors Affect Labor Supply Decisions of the Elderly? (dependent variable: engaged in productive activities during the year)

Linear Model

Model Age 60 to 70 Age 70 to 80

Men Women Men Women Has Migrant Member 0.009 0.058 0.010 0.081*** (0.041) (0.046) (0.046) (0.032) Years of Education -0.005 -0.016*** -0.013*** -0.012** (0.004) (0.005) (0.004) (0.006) Years of Education of Other HH Members

-0.017*** -0.020*** -0.018*** -0.015*** (0.005) (0.005) (0.005) (0.004)

ADL Z-Score -0.113*** -0.079*** -0.103*** -0.049** (0.029) (0.026) (0.022) (0.020) Income from Pension/1000

-0.083*** -0.064*** -0.084*** -0.060*** (0.012) (0.012) (0.011) (0.010)

R-Squared 0.237 0.287 0.261 0.179 Observation 483 586 705 818 Source: China Health and Nutrition Survey (1991, 1993, 1997, 2000 and 2004). Definitions: Migrant Family Member: a member of the household from a previous round is no longer a household member and has moved outside of the home county. All models include age, age-squared, household demographic variables (number of household members over 60, number of children less than 3, children 3 to 7, children 7 to 13, children 13 to 16, spouse present), and year dummy variables interacted with regions to control for province-wide macroeconomic effects. *, **, *** indicate significance at the 10, 5 and 1 percent, respectively

Potential Policy Responses to Aging Rural PopulationPension or Dibao?A Rural Pension?

Current Participation in Rural Pension Programs is Low

Rural Population Participation Rates in Contributory Pension Schemes

0

2

4

6

8

10

12

14

16

18

1994 1996 1998 2000 2002 2004 2006 2008

Participation Rate (%) of Working AgeRural Labor Force

Potential Policy Responses to Aging Rural PopulationPension or Dibao?A Rural Pension?

Current Participation in Rural Pension Programs is Low

New Pension Initiatives:State Council Goal of Social Pension System by

2020In Planning Stage, Rural Pilot in 10 Percent of

Rural Counties Covering 10 Percent of Rural Population: Basic Account plus Individual Account

With Migration and Urbanization, Do Separate Pension Systems Make Sense in the Long-term?