Empowering the Aging Workforce: The Impact of Medical Insurance on Labor Decisions in Rural China

Abstract

Background: Understanding how enhanced medical insurance benefits influence labor decisions of rural elderly individuals is crucial for addressing the challenges posed by population aging on labor market. This study investigated the effects of enhanced welfare levels resulting from medical insurance integration on labor decisions of rural elderly individuals. The objective was to offer policy recommendations to the government to mitigate the decline in the working-age population and sustain the momentum and vibrancy of economic and social development.

Methods: This study conducted an empirical analysis, utilizing two waves of data from the China Health and Retirement Longitudinal Study (CHARLS) collected in 2015 and 2018. This analysis employed the Difference-in-Differences (DID) approach, treating the enhancement of medical insurance benefits for rural residents, due to China's medical insurance integration as a quasi-natural experiment.

Results: Enhancing medical insurance benefits increased the labor supply of older rural individuals, as evidenced by higher labor participation rates and increased hours of work. It also facilitates migrant work while decreasing the willingness to work indefinitely. Medical insurance benefits indirectly influence labor decisions by alleviating healthcare burdens and improving the health status. Notably, the effect is more pronounced among females, higher-income groups, and individuals with poorer health status.

Conclusion: The enhancement of medical insurance benefits resulting from China's medical insurance integration increased the social labor supply and reduced the necessity for elderly individuals to continue working indefinitely. The integration provides disadvantaged groups with improved social security, thereby allowing them to enjoy their later years more fully.