Can information influence the social insurance participation decision of China's rural migrants?

John Giles,Xin Meng,Sen Xue,Guochang Zhao

doi:10.1016/j.jdeveco.2021.102645

Abstract

This paper uses a randomized information intervention to shed light on whether poor understanding of social insurance, both the process of enrolling and costs and benefits, drives the relatively low rates of participation in urban health insurance and pension programs among China's rural-urban migrants. Among workers without a contract, the information intervention has a strong positive effect on participation in health insurance and, among younger age groups, in pension programs. Migrants are responsive to price: in cities where the premia are low relative to earnings, information induces health insurance participation, while declines are observed in cities with high relative premia.

Highlights

One well-documented and common feature of economic development involves a structural change in which labor moves from agriculture to non-agricultural sectors, and from rural to urban areas
As suggested by the model, we find that the treatment effect on health insurance varies across different levels of relative premia: in cities where the cost of participating in insurance is low, the information intervention has a strong positive effect on participation, but where the insurance premia are relatively high, the information intervention has a limited or even negative effect on participation
From the coefficient on the no-contract and the treatment indicator interaction term it is evident that for health insurance participation, the impact of the information intervention is significantly different for respondents with and without contracts in 2015

Summary

Introduction

One well-documented and common feature of economic development involves a structural change in which labor moves from agriculture to non-agricultural sectors, and from rural to urban areas. Rising average incomes and improvements in administrative capacity, enable governments to introduce social insurance systems capable of helping their citizens face a range of uncertainties, including potential adverse health and employment shocks and the risk of poverty in old age. Even as governments recognize the importance of providing social insurance to their populations, implementation may be fraught with both poor understanding of social insurance programs among intended beneficiaries and institutional features that create disincentives to participate. Mandating participation by firms and employees, and even by the informal sector, is fraught with the problem that enrolling in social insurance may reflect a choice. Research on Latin American economies, for example, contains numerous examples in which the high “labor tax wedge” associated with employer-based social insurance creates incentives for both firms and workers to “exit” from the formal sector (Levy, 2008; Perry et al, 2007).

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Discussion

Conclusion