It Takes Three to Ceilidh: Pension System and Multidimensional Poverty Mitigation in China

TL;DR

This study analyzes China's three-pillar pension system from 2012 to 2020, showing that increased participation reduces multidimensional household poverty by enhancing livelihood assets and capabilities.

Contribution

It introduces a comprehensive analysis of the multi-pillar pension system's role in poverty mitigation within China's context, integrating the sustainable livelihoods framework.

Findings

Higher pension participation lowers multidimensional poverty risk.

Synchronization of social insurance, enterprise annuity, and commercial insurance is crucial.

Market-oriented pension pillars boost household assets and resilience.

Abstract

This research, employing the Alkire-Foster approach to uncover multidimensional poverty between 2012 and 2020 in China, models and examines the sustainable effects and mechanisms of the three-pillar pension system in household poverty mitigation with the China Family Panel Studies data. The results evince that more participation in the pension system mitigates the probability of being trapped in multidimensional poverty. The findings reveal the significance of synchronising state social insurance, enterprise annuity, and individual commercial insurance. The mitigation effect of market-oriented pillars is achieved through more investment in and consumption for livelihood assets. Based upon the sustainable livelihoods framework, livelihood assets ameliorate household capabilities in human, natural, financial, and psychological capital against exogenous shocks and uncertainties. Our research contributes to the theory and praxis of the facilitating state in new structural economics illustrated by the multi-pillar pension system in sustainable micro-household poverty mitigation.