The relationship between social pension insurance payment and consumption in China

Abstract

With the increasing level of the aging population in China, the social pension insurance payment is increasing every year. This paper, based on Feldstein’s life cycle theory and used social pension insurance payment and consumption in different regions as panel data, analyzes the relationship between social pension insurance payment and consumption in China. The result shows that there is a significant positive correlation between social pension insurance payment and consumption. Also, all of the analyzed regions are in the same position as the main effect, with significant positive correlation. So, there are reasons to believe that social pension insurance has substitution effect to residents' savings. When the payment of social pension insurance increases, residents' savings level will decrease and the consumption level will increase accordingly.