The Impact of the New Rural Pension Scheme on Retirement Sustainability in China: Evidences of Regional Differences in Formal and Informal Labor Supply

Abstract

This paper evaluates the effect of China’s New Rural Pension Scheme (NRPS) on the retirement sustainability in forms of both formal labor supply and informal labor supply, using data from China Health and Retirement Longitudinal Study (CHARLS). We explore the regional differences of the NRPS effect on labor supply between the Western regions and the other regions of China. Our analysis shows that western rural China has a more severe problem of “ceaseless toil” compared to the rest of the country. We find that NRPS improves the “ceaseless toil” situation of the Chinese rural elderly, and the results show a very different pattern between western China and other parts of the country.