Politics of Inclusion and Exclusion : Dual Pension Regimes in China

Abstract

This dissertation is an attempt to understand the politics of welfare inclusion and exclusion in an authoritarian developing country—China. This dissertation empirically focuses on the expansion of two Chinese pension programs—the residency-based pension program and the employment-based pension program—across mainland China’s 31 provinces over 2005-2015 and examines local variation in the composition of beneficiaries and the types of benefits of the pension programs.

This dissertation argues that the different membership composition of political insiders—a group of individuals who have right to political representation or participation in a geopolitical community and to whom state actors are held accountable—is key to understanding the variation in welfare inclusion strategies evidenced by sub-nationally different pension expansion patterns. When political insiders overlap largely with those who secure stable employment positions (labor market insiders), a narrow yet generous welfare inclusion mechanism based on one’s employment positions develops. This welfare regime selectively benefits those who have both political and labor market power. When political insiders do not largely overlap with labor market insiders, a broader yet shallow welfare regime that distributes welfare benefits on the basis of citizenship develops, encompassing political insiders who lost their positions as labor market insiders. Structural changes including labor informalization and growing labor mobility play a pivotal role in changing the extent to which political and labor market insiders overlaps and thereby inducing changes in welfare inclusion strategies.

Applying this theory in the Chinese contexts, the changing level of overlap between individuals with local citizenship defined by their hukou registration (political insiders) and those who have formal and secure employment positions (labor market insiders) is the key to explain the emergence of dual pension regimes and sub-nationally diverging coverage of the two pension programs—employment-based pension program and the residency-based pension program. In places where most informal employment positions are passed onto local residents and the long-maintained overlap between political and labor market insiders is shattered, welfare programs that encompass a broader segment of society with modest benefits develop. These localities experience a rapid expansion of the residency-based pension program. In places where a large number of informal employment are externalized to non-local workers coming across different provinces and the overlap between political and labor market insiders remains intact, on the other hand, the employment-based pension regime persists.

This dissertation project tests these propositions both qualitatively and quantitatively. On the qualitative side, I conducted interviews with government officials, labor NGO activists, firm managers, and scholars in Beijing, Jiangsu, Shanghai, Guangdong, and Sichuan provinces during the fall of 2015 and spring of 2016. On the quantitative side, I analyzed two data sets. First, I compiled a dataset of pension coverage and other demographic and economic aspects of mainland China’s 31 provinces over the period of 2005-2015. The second is individual-level survey data of Chinese labor dynamics conducted in 2012 and 2014 matched by yearbook statistics on the local political economy.