Rural Pensions, Intra-Household Bargaining, and Elderly Medical Expenditure in the People’s Republic of China

RURALPENSIONS,INTRA-HOUSEHOLDBARGAINING,ANDELDERLYMEDICALEXPENDITUREINTHE PEOPLE’SREPUBLICOFCHINA ZeyuanChenandAlbertPark NO.693 September2023 ADBECONOMICSWORKINGPAPERSERIES ASIANDEVELOPMENTBANK ADBEconomicsWorkingPaperSeries RuralPensions,Intra-HouseholdBargaining,andElderlyMedicalExpenditureinthePeople’sRepublicofChina TheADBEconomicsWorkingPaperSeriespresentsresearchinprogresstoelicitcommentsandencouragedebateondevelopmentissuesinAsiaandthePacific.TheviewsexpressedarethoseoftheauthorsanddonotnecessarilyreflecttheviewsandpoliciesofADBor itsBoardofGovernorsorthegovernmentstheyrepresent. ZeyuanChenandAlbertParkNo.693|September2023 ZeyuanChen(zychen@swufe.edu.cn)isanassistantprofessorattheSchoolofPublicAdministration,SouthwesternUniversityofFinanceandEconomics,Chengdu,People’sRepublicofChina.AlbertPark(afpark@adb.org)istheChiefEconomistandDirectorGeneraloftheEconomicResearchandDevelopmentImpactDepartment,AsianDevelopmentBank. ASIANDEVELOPMENTBANK CreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO) ©2023AsianDevelopmentBank 6ADBAvenue,MandaluyongCity,1550MetroManila,PhilippinesTel+63286324444;Fax+63286362444 www.adb.org Somerightsreserved.Publishedin2023. ISSN2313-6537(print),2313-6545(electronic)PublicationStockNo.WPS230373-2 DOI:http://dx.doi.org/10.22617/WPS230373-2 TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsandpoliciesoftheAsianDevelopmentBank(ADB)oritsBoardofGovernorsorthegovernmentstheyrepresent. ADBdoesnotguaranteetheaccuracyofthedataincludedinthispublicationandacceptsnoresponsibilityforanyconsequenceoftheiruse.ThementionofspecificcompaniesorproductsofmanufacturersdoesnotimplythattheyareendorsedorrecommendedbyADBinpreferencetoothersofasimilarnaturethatarenotmentioned. Bymakinganydesignationoforreferencetoaparticularterritoryorgeographicarea,orbyusingtheterm“country”inthispublication,ADBdoesnotintendtomakeanyjudgmentsastothelegalorotherstatusofanyterritoryorarea. ThispublicationisavailableundertheCreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO)https://creativecommons.org/licenses/by/3.0/igo/.Byusingthecontentofthispublication,youagreetobeboundbythetermsofthislicense.Forattribution,translations,adaptations,andpermissions,pleasereadtheprovisionsandtermsofuseathttps://www.adb.org/terms-use#openaccess. ThisCClicensedoesnotapplytonon-ADBcopyrightmaterialsinthispublication.Ifthematerialisattributedtoanothersource,pleasecontactthecopyrightownerorpublisherofthatsourceforpermissiontoreproduceit.ADBcannotbeheldliableforanyclaimsthatariseasaresultofyouruseofthematerial. Pleasecontactpubsmarketing@adb.orgifyouhavequestionsorcommentswithrespecttocontent,orifyouwishtoobtaincopyrightpermissionforyourintendedusethatdoesnotfallwithintheseterms,orforpermissiontousetheADBlogo. CorrigendatoADBpublicationsmaybefoundathttp://www.adb.org/publications/corrigenda.Notes: Inthispublication,“$“referstoUnitedStatesdollarsand“CNY”referstoyuan. ADBrecognizes“China”asthePeople’sRepublicofChina. ABSTRACT TheruralelderlyinthePeople’sRepublicofChinaspendlessonmedicalexpendituresastheyagedespitedeclininghealth,whichraiseswelfareconcerns.Thispaperinvestigatestheroleofintra-householdbargainingpoweronhealthexpendituresoftheelderlybyevaluatingtheimpactofcashtransfersfromanewsocialpensionprogram.Theprogramprovidedwindfallpaymentstothoseaboveage60,makingitpossibletoemployaregressiondiscontinuitydesignbasedonageofeligibilitytoestimatecausaleffects.Usingdatafromthe2011and2013wavesoftheChinaHealthandRetirementLongitudinalStudy,wefindthatreceivingpensionpaymentsincreasesboththeutilizationofoutpatientcareandoutpatientexpendituresbytheelderlywhoexperiencedillness.Thisresultisrobusttocontrollingfortotalhouseholdexpenditurespercapita,rulingoutincomeeffectsasthemainchannel.Consistentwithpensionsincreasingelderlybargainingpower,wefindthatpensionssignificantlyincreasemedicalexpendituresonlyforthoseelderlywhoco-residewithchildrenorgrandchildrenbuthavenoeffectonthosewholiveindependently. Keywords:medicalexpenditures,pension,elderly,intra-householdbargaining,regressiondiscontinuitydesign,People’sRepublicofChina JELcodes:J14,J26 ThedatathatsupportthefindingsofthisstudyareopenlyavailableinChinaHealthandRetirementLongitudinalStudy(CHARLS)athttp://charls.pku.edu.cn/. 1.Introduction AlargeshareofelderlyinthePeople’sRepublicofChina(PRC)arepoorandinbadhealth,makingthemhighlyvulnerable.AccordingtotheChinaHealthandRetirementLongitudinalStudy(CHARLS)baselinesurveyconductedin2011–2012,22.9%ofelderly(definedasthoseaboveage60)inthePRCwereconsumptionpoor,31.8%reportedbeinginpoorhealth,and40.0%exhibitedelevateddepressivesymptoms(Zhaoetal.2013a).Theruralelderlywereparticularlyatrisk.AccordingtoCHARLSdata,28.9%werepoor,andtheruralelderlyspentlessonmedicalexpendituresastheyagedespitedeclininghealth,incontrasttotheurbanelderly,aswellasmostelderlyaroundtheworld,whospendsubstantiallymoreonmedicalcareastheygetolder(ParkandXia2014;Yang,Norton,andStearns2003). OnepossiblereasonthatruralelderlyinthePRCunderutilizehealth-care