China & World Economy / 58–81, Vol. 30, No. 1, 2022

Evaluating the Redistributive Effect of Social Security Programs in China over the Past 30 Years

Meng Cai, Jing Xu

Abstract

China has improved its social security system in recent decades, with the aim of achieving universal coverage and improving the equity of income distribution. Based on data from the five rounds of Chinese Household Income Project surveys from 1988 to 2018, this paper examines the long-term redistributive effects of social security programs in China. Our results show that social security programs have reduced income inequality consistently, and the positive redistributive effects have been improving for the past 30 years. Social security transfers have had an increasingly essential role in rural areas, especially after 2002 when China started to establish a comprehensive rural social safety net and expanded the coverage of the social security program. The redistributive efficiency of the social security system has also increased recently.