Who benefits from the family-bundled new rural social endowment insurance system?—an empirical analysis of the CHARLS data

NING Manxiu1

(1.School of Economics & Management, Fuzhou University)

【Abstract】Using national baseline data from the project of China Health and Retirement Longitudinal Study (CHARLS) in 2011 and the model of Heterogeneous Treatment Effects, this study analyzed the crowding-out effect as well as the extent of the family-bundled system on intergenerational economic transfer in the framework of new rural social endowment insurance empirically to evaluate effects of the family-bundled system on elderly people’s income redistribution. With all selection bias and unobservable heterogeneous factors being controlled, several findings were made as follows. ① The family-bundled system at the preliminary stage of implementation had no dramatic crowding-out effect on traditional home-based care service for the elderly; ② Unobservable heterogeneous factors could result in an decrease in the children-to-parents net economic transfer in the family which was most likely to be covered by the family-bundled new insurance system; in contrast, elderly with less activeness in participating in the new system would receive a relative large amount of net economic transfer. Dynamism of the economic environment, in which subjects of intergenerational supporting behavior lived, could bring in complexity and variability of intergenerational transaction; thus, the effects of the new rural social endowment insurance system characterized with the family-bundled mechanism required long-term monitoring and observation.

【Keywords】 the new rural social endowment insurance system; the family-bundled mechanism; intergenerational economic transfer; crowding-out effects; the model of heterogeneous treatment effects;


【Funds】 Supported by Young Scientists Fund of National Natural Science Foundation of China (71303050) the Program for New Century Excellent Talents in University in Fujian Province (JAS14039)

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(Translated by CHEN Linye)


    [1]. [1] Adverse selection in the new rural insurance system refers to that farmers with high financial ability (i.e. young and healthy farmers with sources of relatively high or steady incomes) will not join insurance actively; those elderly people with a short time period upon receiving pensions or exceeding the age of receiving the basic pension will take participation in the insurance actively. Therefore, if the family-bundled system is not adopted, these farmers, accounting for the majority of the insured group, will probably drop out of the new rural insurance, discouraging the realization of the target, namely, the target of wide coverage and long-term sustainability. [^Back]

    [2]. [1] Heterogeneous treatment effects have been important to research on social behavior and the assessment of public policies’ effects (Björklund and Moffitt, 1987; Heckman et al., 2006 a; Manski, 2007; Xie, 2013). [^Back]

    [3]. [1] Heckman (1997), Heckman and Navarro-Lozano (2004) found that only when unobservable heterogeneity did not exist in individuals or existed but being irrelevant to individual choices, could methods of instrumental variables ensure consistency of parameter estimation. [^Back]

    [4]. [1] Methods of parameter estimation for ΔMTE (x, u) can be seen in Heckman et al. (2006 b), and Brave and Walstrum (2014). [^Back]

    [5]. [1] In accordance with the general practice from related international research, intergenerational transfer is defined in this paper as the financial transfer among children and parents who live separately due to the difficulty in identifying the financial transaction clearly among children and parents when they live together. [^Back]

    [6]. [2] Usually, the elderly with multiple children may live with one child or alone. Therefore, their living arrangement will have influences on the economic transfer from the children who do not live with them. [^Back]

    [7]. [1] Due to a lack of statistics provided by CHARLS which directly measure children’s income levels, assessments of the ranges by the elderly parents are used to measure their children’s income levels. The value of this variable is based on the response in the questionnaire to the following question “[ names of children]’s (with his/her spouse) overall income of last year belongs to which category (no income; less than 2 thousand; between 2 thousand and 5 thousand; between 5 thousand and 10 thousand; between 10 thousand and 20 thousand; between 20 thousand and 50 thousand; between 50 thousand and 100 thousand; between 100 thousand and 150 thousand; between 150 thousand and 200 thousand; between 200 thousand and 300 thousand; above 300 thousand)?” In this paper, “no income” is assigned as 1, and “less than 2 thousand” is assigned as 2, and so forth; the highest category “above 300 thousand” is assigned as 11; refusing to answer and having no idea are viewed as deficiency. Although a range is used instead of a concrete number in the assessment, it is regarded as more reasonable in the author’s opinion. As the objective of this paper is to investigate the effect of children’s economic status on intergenerational transfer (caring for the elderly), and the specific number is likely to be underestimated, selection of a range rather than the specific number can avoid interviewees’ underestimations with the purpose of deliberately avoiding the sensitive question about income. [^Back]

    [8]. [1] According to Heckman et al. (2006 a), MTE is calculated when heterogeneity UD is assigned with certain values as 0.01, 0.02. . . 0.99. [^Back]


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This Article


CN: 11-1262/F

Vol , No. 07, Pages 31-45+96

July 2015


Article Outline


  • 1 Introduction
  • 2 Literature review
  • 3 The econometric model, strategies for estimation, and sources
  • 4 Analyses and discussions of the estimated results
  • 5 Conclusions
  • Footnote