The Impact Of Social Insurance On Rual Families' Education Expenditure

As China's economy grows,the quality of education and human capital reserve in rural areas has been improved,but still at a low level.In 2016,the population with at most a junior high school diploma in rural areas was still large,which accounted for almost 90 percent of rural population.In rural areas,the proportion with at most a junior high school diploma in 2016 was even smaller than that of urban areas in 1985.According to the actual human capital index made by China Center for Human Capital and Labor Market Research,the human capital index in urban areas in 2016 was about six times larger than that in rural areas.Given to the demographic changes between urban and rural areas,the gap should be even larger.There are usually two ways of improving the education level of residents,public investment and household expenditure.The existing researches have explored what influences families' education expenditure from the perspective of family income,family population,cultural level,marriage and the health status of the family members.Literatures seldom discuss it from the perspective of social insurance.There is a small amount of literatures carry on their theoretical analysis based on the parents' selfinterest and altruistic motivation.There is also a small amount of literatures consider that the social insurance does improve a family's education expenditure based on their empirical analysis,but all of them apply the macro data.At present,there is only one paper in China that analyzed this problem from the perspective of parents' self-interest and altruistic motivation with micro data,but the data is gathered before 2009.From the theoretical point,this paper analyzes the relationship between social insurance and background risks faced by rural families.This paper argues that social insurance can reduce the family's health risks and income risks,then reduce the family's risk exposure.When the family's risk exposure is reduced,the family has the incentive to reallocate the their risky assets.Moreover,when the family's background risk is reduced,the family's preventive savings motivation will also be reduced,then there will be more funds available for consumption and investment,so their ability to invest and consume would be enhanced.Third,when the family's preventive savings decline,the actual consumption level of the family will increase,and social insurance can lower the price of some commodities,such as the “medical” price,which in turn changes the household's consumption expenditure structure,and as the economy develops,the Engel Coefficient of rural families is declining,and it is very likely that more spending will be made in cultural and entertainment projects.According to the analysis,social insurance has the possibility to affect a family's educational expenditure.In order to verify this hypothesis,this paper first refers to the existing research methods on social insurance and household consumption expenditure,social insurance and family risky assets allocation.Then this paper uses Probit,OLS and Tobit to analyze the data provided by China Household Finance Survey(CHFS)in 2013.After analyzing the data,it is found that social insurance has the effect of promoting education expenditure for the rural population.It can be reduced to the following two conclusions: First,the Probit model results show that under the 1% significance level,households that take part in social insurance are 4.68% more likely to spend on education than those who do not participate in social insurance.Second,the OLS model shows that at 1% of significance,households participating in social insurance are 41.1% higher in education expenditure than those that do not participate in social insurance;the Tobit model shows that at 1% of significance,households participating in social insurance are 79.6% higher in education expenditure than those that do not participate in social insurance.Finally,based on the above theoretical analysis and empirical results,this paper puts forward the following two suggestions: First,we should improve the social security system and reduce the background risk of rural families;Second,strengthen the insurance of rural social insurance.