Working Papers

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This paper presents the architecture of the Swedish pension system, the philosophy behind it and illustrates how it works in practice. At the foundation of the Swedish pensions landscape is the public pension commitment. It is based on the philosophy that all countries must begin with: The commitment to provide a sufficient minimum standard of living in old age for all. This is the role of the necessary pillar zero. Pillars one and two consist of mandatory universal public nonfinancial defined contribution (NDC) and a financial defined contribution (FDC) schemes. These cover the earnings of all employees and self-employed – up to a ceiling. In principle, the technical construction of the NDC and the guarantee benefits – explained in greater detail in the paper – can be viewed together as a package that fulfills the guaranteed minimum standard of living in old age, while making full use of the DC accounts to provide an incentive for individuals to contribute to their own retirement income.
This paper offers a new prospect on assessing government cash transfers using a social welfare function framework. It demonstrates how one can use social welfare functions to measures the program efficiency without specifying a poverty line and poverty measures. The paper introduces three alternative principles of targeting, which provides a basis for measuring the program efficiency. By applying the methodology developed in this paper, we compare the targeting efficiencies of 44 countries at different stages of economic development and show that governmental transfers can play a critical role in explaining the Kuznets curve.
Effective targeting is crucial for the success of any social programme. Different evaluation methods may yield different results for any given social programme. This paper evaluates the minimum living standard guarantee programme (Dibao) in rural China using several methods, such as the income approach, the multi-dimensional poverty approach, and a proxy means test approach, and finds the targeting accuracy increases the more comprehensive the evaluation method. As the Dibao fund allocation is largely decided in the villagers’ meeting democratically with a holistic view, it may appear to suffer from a low level of targeting accuracy when simply using an income approach, but may in fact more accurate in alleviating real poverty. This paper argues that a democratically allocate social assistance fund may be a better way in combating real poverty in many developing countries, as it requires less administrative capacity and overcomes the difficulties of identifying the poor.
This documentation introduced the idea to create the weights for CHIP2007 and 2013. The original information and final weight values are also reported.
This paper studies the welfare implications of inequality among social groups by linking relative deprivation with theory of relative utility. It applies a methodology that identifies social groups that suffer greater deprivation relative to the average for the whole society, as a result of the rising inequality in China. Using five waves of the Chinese Household Income Project (CHIPs) from 1988 to 2013, it provides the dynamic evolution of deprivation suffered by different social groups such as rural residents, the elderly, the low educated group, and those live in the Western inland. Our findings provide evidence of the success of urbanization, development of Western areas and education expansion in reducing inequality and deprivation in China.
Using the conventional concept of implicit tax, we investigate pension incentives to retire for private sector employees in China. The social security pension consists of pay-as-you-go defined benefit (DB) and defined contribution (DC) systems. Based on Chinese official parameters and the revised OECD models, our studies conclude that the DB system discourages people from working more, but the DC system offers considerably greater incentives at the expense of financial sustainability. If the annuity factors in the DC scheme were linked to the probability of retirees’ mortality, then both constant incentives to work longer and financial sustainability could be achieved.
Using data from the Chinese Household Income Project surveys for 1988, 1995, 2002 and 2013, we investigate the role of public pensions in income inequality among households with elderly members across two decades of pension policy reforms. We examine the distribution and role of public pensions at a national level. We analyse the evolution of the contribution of public pensions to national income inequality across a much more extended time period than earlier studies, which have generally focused on regional changes over short periods. Our findings suggest that public pensions have become the most important source of income for households with elderly members on average in China, but the distribution of pension income is highly unequal, with a Gini coefficient of 0.74 in 2013. Public pension income has been the largest source of income inequality for elderly households since 2002 and contributed to more than half of total income inequality in the most recent year of the survey. This finding is robust against variations in the income inequality measures used. Additionally, our analysis suggests unequal distribution of pension benefits is the primary driver of pensioners’ income inequality. Among several hypothetical policy changes, ensuring a minimum pension benefit for all existing pensioners seems to be the most fiscally effective option in reducing income inequality, with a 0.8% reduction in the Gini coefficient for a 1% increase in public pension expenditure.
The relevance of tax progressivity measures to policy-making depends on whether they help assess the social welfare implications of taxation. This paper proposes a social welfare function framework to derive measures of tax progressivity and explore their normative properties. Using the social welfare framework, we derive the Kakwani index from Sen’s social welfare function as well as a new class of progressivity measures that incorporate a distribution judgment parameter capturing inequality aversion. The paper also draws social welfare implications of Suits' measure of tax progressivity. In addition, the paper proposes a new measure of tax progressivity derived from Bonferroni social welfare function. We apply the methodology developed in the paper to the Australian data on individual taxes for the 2014–2015 financial year.
The high economic growth and increasing inequality have been the two main features of the Chines economy since the end of the 1970s. The economic growth contributed to a substantial reduction in poverty, and the worsening income distribution contributed to an increase in poverty. The adverse impact of worsening income distribution did not offset the massive reduction in poverty. The primary aim of this paper is to define and measure patterns of growth through poverty elasticity of income sources. It makes methodological contributions in the derivations of this elasticity. The paper analyzes the patterns of growth to Rural China in the period 2007-2013, utilizing the Household and Income Project (CHIP). The empirical results showed that the economic growth has been unfavorable to the poor. It amounted to a loss of almost 25% of growth rate. If China’s objective to eliminate poverty by 2020, such a degree of anti-poor growth should be of concern to the policy makers in China. The paper has drawn many policy conclusions. It has identified which policies are pro-poor, and which are not. And which policies can achieve a rapid reduction in poverty.
This study uses migrant household survey data from 2008 and 2009 to examine how parental migration decisions are associated with the nutritional status of children in rural and urban China. Results from instrumental variables regressions show a substantial adverse effect of children’s exposure to parental migration on height-for-age Z-scores of left-behind children relative to children who migrate with their parents. Additional results from a standard Blinder-Oaxaca decomposition, a quantile decomposition, and a counterfactual distribution analysis all confirm that children who are left behind in rural villages – usually because of the oppressive hukou system – have poorer nutritional status than children who migrate with their parents, and the gaps are biggest at lower portions of the distribution.
随着工资水平的上扬和计算机技术的日臻成熟,计算机在工作岗位上的应用日益普遍。 根据新近的城市劳动力调查资料,58%的城市在岗职工在工作中需要使用计算机。在控制了个人特征、人力资本水平和工作任务属性等因素,并考虑了不可观测的特征可能产生的潜在影响后,我们发现使用计算机可以带来 12-15%的工资回报。使用企业-员工匹配调查数据的稳健性检验,仍然支持在工作中使用计算机会带来生产率提升的基本判断。计算机使用与劳动力市场的进一步结合有利于中国经济转向以生产率推动的经济增长模式,也有助于应对加速出现的老龄化进程。
Adopting a simple demand system, we aim to re-estimate China.s income inequality using the Urban Household Survey (UHS) data assuming the expenditure data is well measured. We find income inequality growth exceeds the growth rate of consumption inequality, although income inequality is still lower than consumption inequality over the period 2003-2009. We also .nd that the increase of income inequality is mainly due to the increase of inequality between the middle expenditure group and the high expenditure group, while the income inequality between the middle-expenditure group and the low-expenditure group slightly decreases. This not only confirms the presence of pervasive grey income, also implying that grey incomes mostly exist in the high-expenditure stratum. Following Aguiar and Bils (2015), we assume that the Engel coeffcient is log-linear and that the income elasticities are constant over time. In the robustness test, we relax the assumptions and find that the estimation results are still robust.
Most poverty research has explored monetary poverty. This paper presents and analyses the global Multidimensional Poverty Index (MPI) estimations for China. Using China Family Panel Studies (CFPS), we find China’s global MPI was 0.035 in 2010 and decreased significantly to 0.017 in 2014. The dimensional composition of MPI suggests that nutrition, education, safe drinking water and cooking fuel contribute most to overall non-monetary poverty in China. Such analysis is also applied to sub-groups, including geographic areas (rural/urban, east/central/west, provinces), as well as social characteristics such as gender of the household heads, age, education level, marital status, household size, migration status, ethnicity, and religion. We find the level and composition of poverty differs significantly across certain subgroups. We also find high levels of mismatch between monetary and multidimensional poverty at the household level, which highlights the importance of using both complementary measures to track progress in eradicating poverty.
China’s Rural Minimum Living Standard Guarantee program (Dibao) is the largest social safety-net program in the world. Given the scale and the popularity of Rural Dibao, it is necessary to rigorously evaluate it so that policymakers know the extent to which the program meets its intended objective of reducing poverty. This paper develops some new methods and uses data from the 2013 Chinese Household Income Project (CHIP2013) to examine the targeting performance of the rural Dibao program. The paper has found that the Rural Dibao program suffers from very low targeting accuracy, high exclusion error, and inclusion error, and yields a significant negative social rate of return. It discusses possible causes and argues that the fundamental mechanism has to be redesigned to increase the effectiveness of the program. The paper makes some recommendations to reform Dibao that will significantly improve targeting and reduce the cost of running the program. That will help China to achieve its goal of eradicating extreme poverty by 2020.
Projects of CCEHD