An Empirical Study of the Effect of Pension Insurance Expenditure on the Savings Rate of Residents

Objective: Lowering the savings rate is a reflection of China's economic structure moving further toward equilibrium. The aim of this study is to explore how to unleash residents' consumption potential and lower the savings rate, a crucial challenge for the high-quality development of China's economy. The pension insurance system may be a positive factor in addressing this issue. Methods: The study selects panel data from 31 provinces, autonomous regions, and municipalities directly under the central government in mainland China from 2014 to 2022. A two-way fixed-effects model is constructed for an empirical analysis of the impact of the basic pension insurance system on residents' savings rate. Results: The results indicate that the level of pension insurance coverage has a significant negative impact on residents' savings rate. In other words, increasing the level of pension insurance coverage will reduce residents' savings. Conclusion: This study helps the government to formulate more accurate and sustainable pension insurance policies and promote the optimization of China's economic structure.