Parity and Security: A Simulation Study of Old-age Support in Rural China

Abstract

Over a 50-year period between 1982 and 2030 in China the number of elderly aged 65 years and older will increase from 49 million (4.9% of total population) to 198 million (13.5%). A simulation of how the elderly would be distributed over a variety of rural households was presented using the SOCSIM package developed by Hammel and Wachter. A nationally representative survey (1987 Sampling Survey of the Aged Population Aged Over 60 Years) found that 60% of the elderly aged 60 years and older lived in multi-generation households 27% lived in two-generation households and 8% lived in one-generation households. 0.6% were dependent on non-family financial support but only 0.1% sought non-family financial support. The microsimulation was run for a number of time periods between 1750 and 2030. Fertility and marriage data were obtained from a variety of sources. In 1990 women aged 65-69 years had an average of 3 surviving children; 8% had no children 9% had one child and 14% had two children. In 1990 85% of households did not have any elderly present. By 2030 women aged 65-69 years would have an average of 2 surviving children and 2.5% would be childless. By 2030 about 25% of household heads aged 35-44 years would be supporting all the elderly compared to 9% in 1990. The simulation showed that the middle age squeeze of supporting young and old simultaneously would be rare. 28% of households would have a dependency burden of 0-1 members. 3% would support more than 2 dependents and 33% would have no dependents. The simulation showed that peak dependency in 2030 would be among household heads aged 45-54 years and 60% would have no parents to support. Only 1.7% would support two parents in 2030. The average old-age dependency ratio would be 11.8% in 2030. The simulation suggested that a social security system would be needed for the estimated 4 million rural elderly without children; 0.19% of disposable income would be required to meet this expense. Elderly parents with one child would require an additional 0.42% of disposable income plus an additional 0.21% for only daughters. 2.3% of disposable income would be required to supplement the support of elderly parents with two children and another 0.3% for those with 2 daughters. After 2030 the elderly would not include the baby boomers and the proportion of elderly would be smaller.