Working Papers
"Pension Reform, Child Investment and Household Saving in China" (Job Market Paper)
Abstract: Seniors may rely on savings or support from adult children. This provides an incentive for parents, when young, to invest in their children's human capital. Pension policies, therefore, can affect young parents' savings behavior, as well as investment in their children's education. I study the impact of a 1997 pension reform in urban China on household savings and child investment using a difference-in-differences approach. A decrease in pension benefits leads to higher savings and investment in children of working-age households. I then estimate adult children's transfers to their parents as a function of their education level, the number of siblings, and senior parents' pension income. Both the number of children and the adult children's human capital are positively correlated with transfers to senior parents. Senior parents' pension income crowds out adult children's transfers. That is consistent with the assumption that pensions, adult children's supports, and savings are substitutes.
"One-child Policy, Pension Reform and Household Saving Rates in China"
Abstract: This paper examines the impact of the One-child policy and pension reforms on household savings in China using an overlapping generations model. The model incorporates intergenerational transfer, endogenous fertility, human capital investment, and pension system by extending the framework in Choukhmane et al. (2013). Using the parameters calibrated with microdata in Choukhmane et al. (2013), I find that the one-child policy increases individual household saving rates across all age groups and it leads to a relatively flat age-saving profile. One-child policy also increases investment in the human capital of children. The model predicts that an increase in pension benefits discourages household savings and decreases investment in the human capital of children. However, responses vary across households with different initial wealth.
Work in Progress
"Welfare Impacts of Consumption Habits with Income Shocks " (with Nabila Biju)