Depending on Whom? Income and Poverty of Older Adults in China

Background and Purpose: Great strides have been made in decreasing poverty and economic insecurity among older adults 65 and over worldwide over the past five decades. The purpose of the present study is to investigate Chinese elderly poverty and analyze to which extent the elderly rely upon their employment, co-residence, and pension plus other government transfers.

Methods: Using the China Health and Retirement Longitudinal Study (CHARLS) Wave II in 2013 (N=8,630), I calculate several income-per-capita measures (pre-transfer, pre-transfer+ pension, and post-transfer) that exclude different types of transfers. Poverty rate is calculated based on the World Bank international poverty line of $1.90/day converted to Chinese RMB using the Purchasing Power Parity (PPP) exchange rate estimated for China in 2013. Then I use national urban and rural consumer price indices as well as an urban/rural price deflator, and the international poverty line translates to 4405.94 yuan per capita for urban areas and 3,216.02 yuan per capita for rural areas. Moreover, logistic regressions are used to estimate the association between poverty headcount ratio and employment, co-residence, and pension receipt after controlling for individual characteristics.

Results: The poverty rates of post-transfer income for urban, rural, and migrant older population are 76%, 30%, and 74%, respectively. Pension receipt has the largest impact on poverty reduction, increasing reliance on employment and significantly reduces reliance on other household numbers. Urban older adults benefits the most from pension (β=-1.493), followed by migrants (β=-0.582). For the migrant elderly, employment is an important income source. The coefficient magnitude of multigenerational living arrangement is larger using pre-transfer (β=-0.285) and pension rather than post-transfer (β=-0.246), suggesting few migrants receive other public transfers and it is substituted by family support.  For the rural elderly, working still remains to be an important income resource (β=-0.634), but multigenerational living arrangement has a statistically negative correlation with poverty status (β=-0.381). Living with a spouse has protective effect on economic well-being across the three groups, suggesting the crucial role of the spouse as a support provider and the general economic protection associated with marriage. Other public transfers have a moderate effect on antipoverty protection.

Conclusion and Implication work, co-residence, and pension support play key roles in financing income and in keeping older adults out of poverty. These findings can be interpreted as the roles played by the three key factors (individual, family, and state) in aging process and suggest welfare expansion on targeted low-income rural and migrant elders with supportive antipoverty programs.