Pension Gap between Chinese Public and Non-Public Sectors : Evidence in a Context of the Integration of Dual-Track Pension Schemes

Using the 2013, 2015 and 2018 waves of China Health and Retirement Longitudinal Study (CHARLS), this paper analyzes the pension gap between the public and non-public sectors and its evolvement in the context of the 2014 reform aiming at integrating the dual-track systems applying the FFL decomposition method. We find that public sector retirees enjoy pension advantages over their counterparts in the non-public sectors across the distribution, ceteris paribus, and the advantage underwent a decrease from 2013 to 2015 and then an increase from 2015 to 2018 after the reform. Both the explained and unexplained part significantly contributes to the sectoral pension gap over years. From 2015 to 2018, the contribution of unexplained part increases substantially across the distribution, partly due to the transitional arrangements designed to secure the pension income levels for public sector retirees, leaving the fairness of the pension system unimproved after the reform. The advantages of public sector retirees in human capital and political capital over their peers in non-public sectors serve as the main sources of the explained pension gap, indicating that the differences in individual investment in the early stages of lifecycle should be considered when explaining the sectoral pension gap