An Analysis on the Effects of Family Living Arrangements on the Demand for Private Pensions
Morrison, Donna R
This analysis uses probit regression models to examine the relationship between family living arrangements and the demand for private pension products using China Family Panel Studies (CFPS) 2018 data. The demand for private pensions is measured by the private pension enrollment status, while living arrangements are measured by a series of indicators including the number of elderly parents and children living together with the “sandwich generation” (Miller and Brody, 1981), their relationships with elderly parents and children, interaction forms, family size, and the number of boys, which is added to test the existence of gender discrimination.The analysis starts with a model that only includes controls for family living arrangements. With extra data available, the second model expands the analysis into the effects of other socioeconomic characteristics, such as gender, education level, and marital status, on the demand for the private pension. In the last model, the mediation effects of perceived risk perceptions are examined.The results show that living with elderly parents can significantly increase the probability for adult children of enrolling in a private pension plan, while a closer relationship with parents has the potential to offset this effect. However, the results don’t provide enough evidence to support the impacts of the family size or living with children on the demand for private pensions for the “sandwich generation” (Miller and Brody, 1981). Neither can the results find the existence of any gender effect in terms of the impacts of children on private pension enrollment status.Among all socioeconomic factors added into the model, education level, gender, urban residency, and family financial conditions show the greatest effects on private pension enrollment. Specifically, women with basic schoolings, living in the urban area with high family income and additional houses are most likely to enroll in private pension plans. In addition, the results show that health status matters as well, even though the overall effect is not large in magnitude.The results provide a valuable reference for developing the private pension industry in China. Instead of providing homogeneous products, private pension suppliers should customize their products to target different types of clients. Also, the findings have an important implication regarding the new Two-Child policy implemented in 2016 -- having more children might not be able to decrease the perceived post-retirement risks of the public, even if the Two-Child policy eventually works to increase the birth rates in China. According to the results of this analysis, to reduce perceived post-retirement risks, it’s important to improve the relationship with elderly parents and facilitate the development of both physical and social infrastructure for an aging society.
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