Social Security Of Chinese Urban Residents' Consumption And Savings Behavior

The impact of Social Security on consumption and saving has been attracting much attention of economists since major of the countries set up the Social Security systems. The developments of consumption theory and empirical approaches have been igniting the subsequent numerous studies. The study analyzing these issues has special significance for China. The Chinese consumers have been being confronted with the system changes in the recent over twenty years. The transformation of the Social Security institution has influenced the consumption and saving of Chinese urban households very much. The paper aims to study the impact of Social Security on the consumption and saving of Chinese urban households theoretically and empirically.The paper relaxes the hypotheses step by step by introducing uncertain longevity, liquidity constraints and Social Security into the basic model of certain longevity. The meanings of the models are made clear by computer simulation. By comparison the simulation models under various assumptions about individual preferences and technology elaborate that the introduction of an actuarially fair Social Security reduces the precautionary saving against lifetime uncertainty and leads to a significant increase in lifetime consumption and welfare. Three values of the intertemporal elasticity of substitution and the interest rate are used respectively to make the results robust.The paper uses 2002 and 2003 Survey of Households of Liaoning Province data sets to make cross-section analysis. Dummy model and Social Security Wealth (SSW) model are specified to empirically analyze the effects of Social Security on the consumption and saving of Chinese urban households. Time-series analysis and Extended Linear Expenditure System (ELES) are used to study the income distribution effect of Social Security on the consumption and saving of Chinese urban...