Policy Expectation Counts? The Impact of China's Delayed Retirement Announcement on Urban Households Savings Rates

TL;DR

This study analyzes how China's delayed retirement policy announcement increased urban households' savings rates, especially among higher-income groups, due to concerns about future pension income, using CFPS data.

Contribution

It provides empirical evidence on the impact of policy announcements on household savings behavior, highlighting heterogeneity across income groups.

Findings

Households' savings rates increased by 8% after the policy announcement.

Higher-income households showed a greater increase in savings.

Negative perceptions about future pension income drove the savings increase.

Abstract

This article examines the impact of China's delayed retirement announcement on households' savings behavior using data from China Family Panel Studies (CFPS). The article finds that treated households, on average, experience an 8% increase in savings rates as a result of the policy announcement. This estimation is both significant and robust. Different types of households exhibit varying degrees of responsiveness to the policy announcement, with higher-income households showing a greater impact. The increase in household savings can be attributed to negative perceptions about future pension income.