Welfare Effects of Endowment Insurance Reform for the Staff of Government Organs and Public Institutions:An Uncertainty and Consumption Perspective
Pension system arrangements affect people's participation decisions,which in turn affect their behaviors of consumption,savings,labor supply,and asset allocation decisions.This paper delves into the welfare effects of the en-dowment insurance reform for the staff of government organs and public institutions,with a particular focus on the influ-ence of uncertainties on consumption.Initially,this paper outlines the evolution of the endowment insurance reform for the staff of government organs and public institutions.After 1991,the endowment insurance for enterprise employees and that for the staff of government or-gans and public institutions were operated separately,but they were integrated in 2015 in an effort to promote fairness.The reform employs differentiated pension benefit calculation methods for senior staff(retirees before October 1,2014),staff in the transition period(employees who started work before October 2014),and new staff(employees who started work after October 2014).According to the policy,the pension benefit calculation methods are easier for the senior staff and new staff.For staff in the transition period,a 10-year transition period was established.During this period,they can enjoy higher pension benefits by comparing the calculation methods for senior staff and new staff.The staff beyond the 10-year transition period is subject to the calculation method applicable to new staff.The calculation method applicable to senior staff is related to basic salary and years of contributions,but that to new staff incorporates more factors.As a conse-quence,the staff beyond the 10-year transition period faces more uncertainties.The paper then constructs a life-cycle model to investigate the relationship between pension benefits as well as uncer-tainties and households'saving and consumption behaviors.The model suggests that increased uncertainties lead to de-creased consumption and increased savings.In the empirical analysis,difference-in-differences and difference-in-difference-in-differences models are used to test the relationship.The data used in this paper come from the China House-hold Income Project(CHIP)conducted by Beijing Normal University in 2013 and 2018.The empirical results show that uncertainties decrease consumption.The results withstand various robustness checks,including a parallel trend test,modi-fying dependent variables,altering the sample used in regression analyses,and employing alternative methods beyond the difference-in-differences framework.Additionally,the paper conducts a heterogeneity analysis and considers intergenera-tional effects,further affirming the robustness of the conclusions.It should be noted that the reform is an incremental one.Therefore,the decrease in consumption can be attributed to increased uncertainties rather than a decline in expected income.This paper is of great significance as it offers new em-pirical evidence on the relationship between uncertainties and consumption.From a practical standpoint,an increase in uncertainties can offset the impact of sustained revenue growth.Therefore,the government needs to reduce uncertainties alongside increasing household income in order to sustain the role of consumption in economic growth.
Endowment Insurance ReformThe Staff of Government Organs and Public InstitutionsConsumptionUn-certainty
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