The income redistribution effect of social security in China

Abstract

Based on the data collected by China Household Income Project (CHIP), this paper compares the redistribution effect of China's social security in 2013 and 2018, respectively. The results show that the overall redistribution effect of China's social security has been enhancing. First, social security transfer income has played a moderate role in narrowing income inequality, while social security contribution, especially the medical insurance contribution, has widened the income gap. Second, the redistribution effects of social security on rural residents and migrant workers have increased. Third, social security effectively offset the growing income gap due to market factors in eastern China but failed to realize it in central and western China. Fourth, the narrowing of the urban-rural-migrant gap and regional gap in social security has promoted the enhancement of the overall redistribution effect of social security. Fifth, compared with high-income countries, the redistribution effect of China's social security system operated on a much smaller scale. We conclude by putting forward some policy suggestions.