This dissertation presents three essays in Chinese reforms and household savings.
Chapter 1 is a survey paper, which reviews the relation between various of Chinese
reforms and urban households’ saving decisions and focuses on the housing finance
reform and the health care reform. The housing finance reform may promote the
households to accumulate wealth for the home purchase in the future; the health care
system reform could induce the households’ out-of-pocket expenses and the strong
saving motives. According to our knowledge, there is little empirical evidence on the
relation between the 1999 housing finance reform and the saving rate and the relation
between the 1998 health care reform and the saving rate.
Chapter 2 focuses on the partial package of the housing finance system, namely
the institution of the Housing Accumulation Fund (HAF), in which both the employer
and the employee contributed a fixed amount of employee’s wage. We use two waves
of the Chinese Household Income Project Survey (CHIPS) in 1995 and 2002 and
adopt a two-step estimation procedure to explore the HAF effect on the household
saving rate and the home ownership. Our estimation results provide evidence of the
positive effect of HAF on the saving rate, as well as the positive effect of HAF on the
home ownership. To be more precise, households with higher accumulated amount
of HAF save more and are more likely to have private houses. Our results imply
that there is an incomplete credit market, where purchasing houses becomes feasible
but the down payment is high and loans are not enough to purchase a house, could
stimulate more savings rather ran help people to smooth consumption. In addition,
HAF helps the households to be home owners and serves as a way to motivate the
accumulation of financial sources to be used as a down payment.
Chapter 3 is a joint work with Dr. Noemi Pace. In this Chapter, we focus on
the third stage of the health care reform in 1998. In 1998 China established a new
nationwide public insurance scheme, which replaced the Labor Insurance Scheme and
ivthe Government Insurance Scheme, called the Basic Insurance Scheme. Using two
waves of the Chinese Household Income Project Survey in 1995 and 2002, we explore
the public health insurance effect on the household out-of-pocket expenses and the
saving rate in both years. We find that, before the 1998 health care reform, the public
health insurance served as a cushion against the health risk, reducing the households’
out-of-pocket expenses and saving for precautionary motive, on the contrary after the
health care reform the public health insurance seems to be ineffective as a source of
protection against income losses.