China’s Mandatory Retirement Policy

One of the reasons that it is difficult to observe the life cycle patterns of private transfers in the United States, especially changes at retirement, is due to voluntary retirement decisions, as most professions do not have a mandatory retirement age. There are ages, however, when people can claim their full Social Security, Medicare, and other benefits. More importantly, the retirement policy in the United States allows retirees to receive pensions or benefits from the government without necessarily having to leave the company or their position; it follows, then, that retirees can choose to continue to work at the same position even after they process their retirement.

In China, however, processing for retirement requires individuals to leave the company and their position. The competitive and relatively more tough labor market for retirees typically forces them to leave the labor market permanently, which has a huge impact on retired households.

In addition, urban Chinese residents abide by the Chinese mandatory retirement policies According to a series of government documents, these polices are mainly based on age require­ment; a policy issued in 1994 states that, due to the process of SOE (state-owned enterprises) reform in the 1990s, a woman can retire at age 45, 50 or 55 as a cadre, while a man can retire at age 50, 55 or 60. ZHAO (2010) identifies discrepancies in the probability of retirement at those retirement ages, using the 2005 1% population sample survey.

There is emerging literature studying the change of consumption patterns at retirement ac­cording to the regression discontinuity design, such as that of Battistin, Brugiavini, Rettore, and Weber (2009), Cho (2012), Battistin, Brugiavini, Rettore, and Weber (2007), Li, Shi, and Wu (2015), etc. However, there are a small number of studies that use the regression discontinuity design to identify the causal impact of retirement on private transfers. As such, this paper will apply the RDD framework to study the private transfers in China.