Social pension insurance and household risky asset investment: Evidence from China

Using the data from the 2013, 2015, and 2017 waves of the China Household Finance Survey, this paper explores the impact of participation in social pension insurance on household risky asset investment with the time-varying difference-in-difference model. The research findings indicate that, in urban areas, insured households are 2.3% more likely to invest in risky assets compared to uninsured households, and the share invested in risky assets is 0.8% higher. This positive effect is more pronounced for households with a higher level of risk preference. At the same time, there is no significant difference in the probability or proportion of risky assets allocation between insured and uninsured households in rural areas. These findings have important policy implications. When the government reforms the social pension insurance system or allocates public resources in the future, they can consider gradually breaking the dual urban-rural structure in the pension insurance system to alleviate concerns among rural households regarding uncertainties.