The impact of old-age pensions on the happiness level of elderly people – evidence from China

Abstract

Abstract As an important source of income for elderly people, pensions have a great impact on their wellbeing. There are three different pension systems in China (the Old-age Insurance System for Government Agencies and Institutions (OISGAI), the Basic Old-age Insurance System for Urban Employees (BOISUE) and the Social Insurance of the Old-age Pension for Urban and Rural Residents (SIOPURR)). This study empirically analyses the impact of various pension types on the happiness of elderly people in China and further explores the potential impact mechanism using the 2014 China Family Panel Studies data. The study suggests that first, receiving pensions from OISGAI, BOISUE and SIOPURR is positively correlated with the happiness level of elderly people. Second, the sense of happiness of elderly people who receive BOISUE is higher than that of those receiving SIOPURR, which is mainly caused by the difference in the level of pension benefits. When the level of benefits is controlled for, there is no significant difference between these two groups. Third, when they have the same level of pension benefits, the happiness of elderly people who receive OISGAI is significantly higher than that of those who receive pensions from the other two systems, which is possibly related to the hidden ‘special’ government guarantee and the difference of the growth rate of the benefit level.