Gender and Public Pensions in China: Do Pensions Reduce the Gender Gap in Compensation?

Abstract

This paper analyzes gender issues with respect to public pensions in China. Because provision of public pensions in China is highly fragmented, with different programs applying to different groups of people, we focus on the largest mandatory public pension program in urban China, the Urban Employees’ Pension Program. The paper uses data from the China Health and Retirement Longitudinal Study (CHARLS) for 2011 to empirically analyze the causes of gender differences in benefit levels between men and women. We argue that raising the retirement age for women from its current age for most women of 50 would be a major step toward gender equality in public pension benefits. Women would have higher benefits than currently due to having longer working careers, and they may have higher wages as a result of their longer careers. They would also have higher benefits from the individual accounts pensions due to more years of contributions and investment earnings, and a more generous benefit conversion factor due to the older age when they started receiving benefits. Nonetheless, an important feature of the Chinese public pension system is that the gender gap in benefits is less than the gender gap in earnings. In many countries, the reverse is the situation, in part because women have fewer years of work, as well as lower earnings, than men. We explore reasons why the gender pension gap in China reduces the gender gap in compensation.