Procrastinated Participation in Social Insurance Expansion : Evidence from China’s New Rural Pension Scheme

This paper documents the long-term dynamic participation into the New Rural Pension Scheme (NRPS) in China, which has been expanded to nearly universal coverage. Although the NRPS is highly subsidized and strongly promoted by Chinese government, a large proportion of residents procrastinate in participation. Exploiting the 60-year-old age discontinuity in the NRPS benefit structure, this paper examines the effect of the NRPS policy design on participation behaviors and shows that, cash transfer provides strong participation incentivization. The intra- and extra-village channels of government promotion, respectively, are associated with less procrastination behaviors, while an offsetting effect occurs when both channels exist. These findings demonstrate behavioral nature of the procrastinated participation in the NRPS and highlight the importance of paternalistic policy design and promotion, while alerting to a possible side effect of paternalism that an efficiency loss occurs in intensive persuasion by the strong government