Association for Public Policy Analysis & Management

Welfare states use redistributive policies like public pension to tackle the issue of inequality, but a localized pension system in China leads to vast regional disparity in pension provision, effectively exacerbating inequality in this country. This article applies Lyle Scruggs's (2014) approach to measure pension de-commodification index for 31 Chinese provincial jurisdictions across the period from 1997 to 2012 and utilizes time-series-cross-section statistical techniques to explore the socio-economic and politico-institutional determinants of the cross-provincial variation in the level of pension generosity. The result shows that pension de-commodification in China owes much to this country’s bureaucratic competition, in which municipal leaders compete to outperform each other in generating economic growth in order to better their promotion chances. Generous local pension schemes are then used by local leaders to attract and retain skilled workers, who have become increasingly scare as labor markets gradually tighten since the early 2000s. It is the interaction between the political institution and the changing economic climate that accounts for the inequality in pension provision in China.