The Impact of Fiscal Subsidy on China’s New Rural Pension System: A Natural Experiment
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This paper studied the impact of fiscal subsidies on the participation rate and contributions of the rural residents in the China’s New Rural Pension Scheme (NRPS) program using a natural experiment, where the fiscal subsidies includes the incentive pension and the matching subsidy. The results showed that incentive pension can significantly improve the rural residents' participation rates, but participation rate of young residents are less than the older residents. We also showed that matching subsidy does not affect the rural residents' participation rates and contributions significantly. Our results suggest that the current fiscal subsidies play an important role in the establishment and expansion of the NRPS program, but have not increased the participation rate of younger people, which was one of the initial goal of NRPS.