The Impact Of Unemployment Insurance On Fanilies' Savings

For a long time,the high savings rate of Chinese residents has been a hot topic for domestic and foreign scholars.Since the reform and opening up,the economic system reform has been fully implemented.As a result,the proportion of the non-public economy,such as the private and individual economy,foreign economy and others,has greatly increased.Thus worker's enthusiasm and creativity has been fully arouses,and people's living standards and disposable income has improved continuously.However,economic growth is accompaned by a number of issues,such as the difficulty of residents' employment and expensive medical treatment problem.the social security system with the lagging behind reform process is difficult to provide social security for the large-scale informal employee.Thus,people choose"low consumption and high savings" to guarantee the stability of future life.However,with China's investment slowdown,export decline,China's economy enter into the growth stage of the "new normal" in recent years,the urgent demand is to adjust the mode of economic growth,and stimulate consumer demand,so that domestic demand has become an important driving force for economic growth.In the literature search of China's high savings rate,domestic and foreign scholars mostly explain the consumption and savings behavior of residents through precaution saving theory.The theory suggests that precautionary savings stem from the future uncertainty,and consumers take more cautious behavior in the face of uncertainty so as to prevent future uncertainties in income and expenditure to bring an impact on stable life.According to the conclusion of literature,the residents of our country have significant precautionary savings motives,medical insurance and pension insurance have a negative effect on the precautionary savings of our residents.As an important part of the social security system,unemployment insurance system protects the basic living standard and reduces the future uncertainty of the unemployed.Therefore,it is of great significance to study the impact of unemployment insurance on the household savings in China.From the perspective of precautionary savings,the paper uses buffer-stock model to do research both theoretical and empirical.On the theoretical side,The paper introduces the development process of precaution saving theory and the buffer-stock model which is the standard research framework of the theory,and the unemployment insurance fund is introduced into the model.Under the premise of maximizing utility,it is concluded that the household optimal savings will decrease with the increase of the unemployment subsidy by derivation of the optimal savings with respect to the unemployment benefit in the model.that is,the unemployment insurance can reduce the uncertainty of the future income of the residents significantly,thus reducing precautionary savings.Based on the theoretical research,empirically this paper uses the micro panel date of China Family Panel Studies(CFPS)to establish individual fixed effect regression model of panel data to study the impact of unemployment insurance on household savings,thus estimating the impact of unemployment insurance on household savings in the model.According to the family saving rate =(household disposable income-household consumption expenditure)/household disposable income,two kinds of calculation methods are used in this paper to define the saving rate,household consumption expenditure of saving rate 1 includes food,clothing,transportation,entertainment and other daily consumption,but does not include rigid consumption such as medical and education,while the household consumption expenditure of saving rate 2 includes the above daily consumption and rigid consumption.It is found that unemployment insurance has a significant negative effect on household savings.Whether the explained variables is the savings rate 1 or the savings rate 2,or whether the key explanatory variable is whether the family participates in unemployment insurance or the number of households participating in the unemployment insurance,the household savings rate is reduced.After that,this paper divides the sample from the two dimensions of household income and the age of household head,and examines the impact of unemployment insurance on household savings for different samples.It is found that the negative effect of unemployment insurance on household savings will vary with family characteristics.that is,unemployment insurance can greatly curb the savings of low-income families,while the negative effect of unemployment insurance on household savings is mainly seen in the family which age of household head is lower than 45 years old.With the mutual verification of theoretical results and empirical results,it is proved that participation in unemployment insurance has a negative effect on household savings significantly,which can stimulate the consumption of residents and provide the source power for China's long-term economic growth.On this base,this paper puts forward three policy suggestions.The first point is to improve the coverage of unemployment insurance in China,especially the low-income group and the informal employee;the second point is to shorten the unemployment insurance payment period,while raising the insurance subsidy standards;and the last one is to strengthen skills training of the unemployed and the low-income group.Because of the previous studies using macro data to do research,The innovation of this paper is to use micro panel data to study the impact of unemployment insurance on the precautionary savings.There is little research in this area.At the same time,because of the limited time and ability,this paper is confined to the perspective of precautionary savings,and only studies the impact of unemployment insurance in social insurance,so does not include other insurance,such as medical insurance and endowment insurance,this can be the direction of further research in the future.