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Member Research & Reports

Member Research & Reports

New Pension System Changing China’s Traditional Family Structure, Yale Research Finds

China’s population is aging at an alarmingly fast rate.

Some 123 million of the country’s 1.4 billion people are over age 65, and a projected 330 million will reach old age by 2050. The need for additional services to care for the elderly in China, like everywhere, is a growing concern. To ease the increasing burden of elder care, China instated a pension program for rural residents, the New Rural Pension Scheme (NRPS). Begun in 2009, it is now the world’s largest pension system.

Xi Chen
[Photo: Dr. Xi Chen]

In a recently paper published in the journal Review of Economics of the Household, Yale School of Public Health assistant professor Dr. Xi Chen, examines how NRPS is causing a shift in social patterns, and decreasing the rate of traditional intergenerational living arrangements. Through a longitudinal study of households of elderly parents and adult children in rural Guizhou province, Dr. Chen found that once parents reached the age of 60 and began receiving a pension, their children were less likely to co-reside with them, causing the elderly to turn to external support services to meet their needs.

Though many countries globally are facing the challenges of populations that are growing older, China is confronting particular challenges that make caring for the elderly a more pressing issue. Decreasing birth rates, caused by the country’s strict family planning policies that limit a family’s number of children, put additional pressure on children to care for parents without help from siblings. Further, the tradition of filial piety has historically called for elderly parents to be cared for by children in the home. Before the NRPS, China had no safety net for care of the elderly, making it nearly impossible for elderly people who needed or wanted to live independently to do so.

asian senior in buddhist temple at peaceful background

In his study, Chen found that not only does the NRPS impact the pensioners, but there is a “spillover” effect onto a second generation. With the additional pension income, adult children of pensioners become free to leave rural areas, where farm work is often the only source of employment, and pursue more lucrative opportunities in urban areas, where there are labor shortages.

Similar pension programs have been successful in other developing nations, and, according to Dr. Chen, China would benefit from an expansion of its pension program.

“China could learn from the more generous pension program in South Africa, which on average it provides pensioners double the per capita income,” he said. As has been the case in South Africa, there is potential for an expanded pension program to have positive impact on even a third generation. Expanded pensions could mean that the grandchildren of pensioners could experience lower rates of child labor, better school attendance, and better nutrition as a result.