The health care system reform in China: Effects on out-of-pocket expenses and saving

This paper aims to evaluate the impact of 1998 Chinese health care reform on out-of-pocket expenditure and on saving. Existing evidence on the results achieved by this reform in terms of reduction of out-of-pocket medical expenditures is still mixed and contradictory, and very little is known about the impact of these measures on the consumption and saving behavior of the Chinese population. To shed more light on this issue we use data collected in 1995 and 2002 by the Chinese Household Income Project (CHIP). Contrary to previous evidence, our findings suggest that the effects of the reformhave beenmore articulated and heterogeneous. In fact, we find that once properly accounting for income distribution and unobserved heterogeneity (potentially induced by health status), out-of-pocket medical expenses and saving rate are affected by the reform in a differentiated way. In particular, we find that out-of-pocket expenses decrease only for high income individuals with good health status and the saving rate increases only for low income individuals with good health status. This result is actually worrisome, as it suggests that the public health coverage after the reform provides financial protection only to individuals that are relatively better off (with good health status and/or high income)

The One-Child Policy and Household Saving

Abstract We investigate whether the “one-child policy” has contributed to the rise in China’s household saving rate and human capital in recent decades. In a life-cycle model with intergenerational transfers and human capital accumulation, fertility restrictions lower expected old-age support coming from children—inducing parents to raise saving and education investment in their offspring. Quantitatively, the policy can account for at least 30% of the rise in aggregate saving. Using the birth of twins under the policy as an empirical out-of-sample check to the theory, we find that quantitative estimates on saving and education decisions line up well with micro-data.</jats:p

The one-child policy and household saving

We investigate whether the "one-child policy" has contributed to the rise in China's household saving rate and human capital in recent decades. In a life-cycle model with intergenerational transfers and human capital accumulation, fertility restrictions lower expected old-age support coming from children - inducing parents to raise saving and education investment in their offspring. Quantitatively, the policy can account for at least 30% of the rise in aggregate saving. Using the birth of twins under the policy as an empirical out-of-sample check to the theory, we find that quantitative estimates on saving and education decisions line up well with micro-data

The One-Child Policy and Household Savings ∗

We ask how much the advent of the ‘one child policy ’ can explain the sharp rise in China’s household saving rate. In a life-cycle model with endogenous fertility, intergenerational transfers and human capital accumulation, we show a macroeconomic and a microeconomic channel through which restrictions in fertility raise aggregate saving. The macro-channel operates through a shift in the composition of demographics and income across generations. The micro-channel alters saving behaviour and education decisions at the individual level. A main objective is to quantify these various channels in the data. Exploiting the birth of twins as an identification strategy, we provide empirical evidence on the micro-channel, at the same time imputing roughly 40 % of the rise in aggregate household saving rate to the policy since its inception in 1980. More than two-thirds of this rise is found to be attributed to the micro-channels alone. Our quantitative OLG model can explain from 30 % to 55 % of the rise in aggregate saving rate; equally important is its implied shift in the level and shape of the age-saving profile consistent with micro-level estimates from the data

The One-Child Policy and Household Savings ∗

We ask how much the advent of the ‘one-child policy ’ can explain the sharp rise in China’s household saving rate. In a life-cycle model with endogenous fertility, intergenerational transfers and human capital accumulation, we show a macroeconomic and a microeconomic channel through which restrictions in fertility raise aggregate saving. The macro-channel operates through a shift in the composition of demographics and income across generations. The micro-channel alters saving behavior and education decisions at the individual level. A main objective is to quantify these various channels in the data. Exploiting the birth of twins as an identification strategy, we provide direct empirical evidence on the micro-channel and show its importance in accounting for the rise in the household saving rate since the enforcement of the policy in the early eighties. Our quantitative OLG model can explain from a third to at most 60 % of the rise in aggregate saving rate; equally important is its implied shift in the level and shape of the age-saving profile consistent with micro-level estimates from the data