Benjamin, Brandt, Rozelle

 Aging population has received considerable attention. _Steep decline in fertility _Longer life expectancy

 Most of attention focuses on the present and future pension liability of state enterprises and the need for a more modern, financially viable public pension system for workers.  Striking by its absence from the discussion, however, is the recognition that the majority of elderly Chinese not covered by formal pensions live in rural areas.

 First, family values remain strong in rural areas, and filial piety sustains the traditional institution of family care for the elderly.  Second, any formal public policy response to the needs of the rural elderly may undermine the existing private arrangements.

 The perceived relative strength of rural social security is based on historical impressions of filial piety and codification of family responsibility for the elderly in existing laws. _ marriage law of 1950 _ constitution of 1954 _ penal code of 1980

 Historically, the primary mechanism by which the young cared for the old was through shared living arrangements.  Parents would live with their sons, retaining control over family assets until the father’s death. Assets would then be divided among the sons, who were expected to care for their mother.

The collectivization of agriculture in the early 1950s exerted an equivocal influence on family structure. On the one hand, the family institution was enshrined as the principal source of old-age security. One the other hand, collectivization also undermined the traditional role of the family. Asset accumulation was curtailed significantly reduce the bargaining power of elderly. Moreover, the village (collective) took more responsibility for transfers to needy households.

 Some researchers suggest that traditional family structure might restore itself in the face of increased commercialization and diminished role of the collective.  Most, however, argue that it will be further weakened.

Economic growth is usually accompanied by movement toward conjugal, in place of kinship–oriented, families. Restrictions on land ownership constrain individuals from accumulating assets for their old age. Village support to the elderly has been reduced. Attitudes of the young toward the old may be changing.

 Change in living arrangement need not signal an end to family responsibility for elderly. Intergenerational transfers can occur across as well as within households.  The question is whether these mechanisms fully substitute for the traditional within- household transfers.

 The objective is to provide an overview of he factual background to issues mentioned above.

 Compare the present with the past using a historical survey of the same region  Compare the rural and urban households

 Survey conducted by authors in 1995  Survey conducted by Japanese investigators in 1936 and covers 1935  China Health and Nutrition Survey, carried out in 1990 and containing 1989

 Primary question is whether extended families remains an important means by which the young care for their elderly parents. One sign of possible erosion of transfers to the elderly would be a decline in percentage of elderly living with adult children.

 Fragmentary (no conjugal unit)  Simple ( one conjugal unit)  Extended (one pair with other co-resident adult kin)  Multiple (two o more conjugal units)

 Most households in 1995 were simple family households. In contrast, 1/3 of households in 1935 were simple, implying a radical shift in household structure.  Seldon (1993) argue that collectivization in 1950s contributed to the demise of extended and multiple household.

 There is little difference between the urban and rural distributions of household types.

 There is no sense in which early retirement occurs in rural China, at least in the ways we think of it in industrialized countries. Women’s participation drops off sharply by age 65, whereas men’s declines more gradually. If they are still alive, most rural Chinese men can anticipate working into their 70s.

 In urban areas, employees of state enterprises are subject to mandatory retirement. By contrast, rural residents have farms from which they need not retire until they are physically incapable of working. Furthermore, most urban workers have state- provided pensions, which reduce the need to work.

 In 1930s: A young boy adds the equivalent of 0.08 adult males to the farm labor force, a teen adds 0.34 men, a prime-age male adds o.55, and a man age 61 or older adds  Overall, for males the 1995 coefficients are larger than those for 1935 except for teens.  Females in the 1990s were more likely to be working on the farm than was the case in the 1930s.

 Does the labor supply of the elderly living on their own differ from that of elders living with their children?

 The participation begins to decline for men over age 60.  The participation rate for older men in simple family household is much higher (0.94) than for men living in multiple households (0.61).  The decline in employment with age occurs only for those men living in multiple households.

.This result suggests that the elderly who live on their own work as much as they did when they were younger.  The numbers do suggest a positive association between living in extended households and the possibility of retirement.

 How do living standards of the elderly compare with those of the young, and has the relative position of the elderly changed over time? Are living arrangements related to living standards?

 Income does decline more steeply for the elderly than does consumption, a pattern that is consistent with a life cycle model.

 In 1935 data: the absence of any effect of old age  The urban and rural age profiles are similar using 1989 data

 The elderly have lower mean income than younger household members. However, it also suggests that for whatever poverty line one might choose, the elderly would have a significantly higher cumulative distribution function, or poverty rate, than the non- elderly.

 Based on the 1935 data, the cumulative distribution functions for the two groups are virtually coincident. This finding reinforces the case that the elderly were significantly better off in relation to the non-elderly during the 1930s than in the 1990s.

 1995 data: the elderly are associated with the smallest increase in household income, smaller even than those associated with children.  The most striking results are for rural households in Household income increases as much with the number of elderly as it does with prime-age adults.

 Very few rural elderly have pension income  Private transfers are very important.  70% of simple families receive remittances, compared with 30% of extended households.

 The elderly in urban areas have significantly higher pension income than do the rural elderly.  There is little difference between urban and rural areas with respect to private support for the elderly.

 1995: The old command no more land than the young.  1935: The age of household members was highly correlated with per capita land.

 There is no foundation for the notion that the rural elderly are well taken care of, at least in comparison with the urban elderly. Most evidence instead points to a relative deterioration of the economic position of the elderly in rural areas, and a weakening of the family as a social security institution.  The evidence reviewed here suggests that the rural elderly warrant more attention than they have received.