Regional Disparities in China’s Basic Pension Insurance and Labor Migration

Abstract

China’s basic pension insurance is an essential part of the Chinese social security system. This study is based on a dynamic panel data for 31 provinces in China using system-GMM estimation to analyze the relativity between expenditure level of basic pension insurance and labor migration along with other factors. Both the qualitative analysis and empirical study show how resident population proportion has a negative effect on the expenditure level, while the payment rate has a positive effect on the expenditure level periodically. Population aging structured by death rate has a negative effect on the expenditure level. Thus, implementing the proposed universal pension scheme should be based on the regional disparities in basic pension insurance measured by its expenditure level. Also, transfer payment mechanism should be shaped by labor mobility.