Household Registration, Old-Age Insurance, and Consumption: Evidence from China

Abstract

Understanding migrants’ status and socio-economic outcomes can help develop immigrant societies. Household registration in China plays a vital role in migrants’ status to provide an excellent research environment. Based on panel data from the Institute of Social Science Survey (CFPS) from 2012 to 2020, this paper investigates the impact of various old-age insurance schemes on urban residents’ consumption with the difference in household registration. The result shows that insurance increases consumption more in a higher benefit scheme due to a lower level of precautionary saving motivation. Household registration reduces consumption by causing disparities in insurance coverage. Even after matching propensity scores to adjust for baseline differences between agricultural and non-agricultural households in cities, residents with agricultural registration participate more in a lower benefit scheme of old-age insurance. Furthermore, agricultural households consume less than non-agricultural households despite receiving the same old-age insurance scheme, owing to a greater incentive for precautionary savings. This finding sheds light on the relationship between economic behavior and social conditions with significant policy implications for the economic assimilation of migrants.