Neha Bairoliya

We develop a dynamic general equilibrium model to analyze the impact of social insurance policy and demo- graphic changes on rural-urban migration in China. Quantitative analyses indicate that different social insurance programs not only have differential effects on net migration flows but also on the age and income distribution of migrants. Enrolling migrants in urban pensions discourages rural-urban migration at young ages and reverse migration in old-age. In contrast, urban health insurance incentivizes rural-urban migration among low income groups at all ages while simultaneously disincentivizing reverse migration. These differences subsequently have important impacts on overall migration patterns and the macroeconomy. Incorporating population aging in the model also yields an increase in the working age migrant share as higher capital accumulation maintains sig- nificant upward pressure on urban wages. Overall, results indicate that general equilibrium effects matter and demographic and policy changes alter migration incentives differently at different stages of the life-cycle.

Canonical life-cycle models predict that rational, fully forward-looking agents should perfectly smooth consumption over their lifetime. This prediction, while not supported by the data, has been mostly tested for developed countries like the U.S. We use recently available, rich longitudinal data for a large sample of households to understand patterns of consumption expenditures, income growth and savings rates in India. Our empirical analysis has several important findings. First, growth in total household consumption and income is comparable to that of the U.S. However, unlike the U.S., Indian households exhibit no growth in non-durable consumption expenditures after adjusting for family size. We document significant heterogeneity along various population sub-groups, but none of them exhibit growth close to U.S. households. Savings rates, measured as total income net of non-durable expenditures, on the other hand exhibits a strong hump over the life-cycle. We present evidence that the need to save for lumpy investments such as housing, cars, tractors and cattle are key drivers of the high savings rate growth over the life-cycle for Indian households.

We assess the impact of demographic changes on human capital accumulation and aggregate output using an overlapping generations model with endogenous savings and human capital investment decisions. We focus on China as it has experienced rapid changes in demographics as well as human capital levels between 1970 and 2010. Additionally, further variations in demographics are expected due to the recently introduced two-child policy. Model simulations indicate that education shares and income per capita will be lower with a fertility rebound as compared to status quo fertility. We find education policy to be effective in mitigating these adverse outcomes associated with higher fertility. While long-run declines in output per capita can be offset by a 4.7% increase in the government education budget, it requires a 28% increase to achieve the same outcome in the short run.

We estimate the distribution of well-being among the older U.S. population using an expected utility framework that incorporates differences in consumption, leisure, health, and mortality. We find large disparities in welfare that have increased over time. Incorporating the cost of living with poor health into elderly welfare substantially increases the overall inequality. Disparity measures based on cross-sectional income or consumption underestimate the growth in aggregate welfare inequality. Moreover, health is a better indicator of an individual's relative welfare position than income or consumption.

Married individuals may be better placed to mitigate various lifecycle shocks than singles. We find evidence of valuable insurance through a spouse by looking at parental long-term care provision at older ages. Utilizing longitudinal data from the Health and Retirement Study, we empirically show that parental long-term care provision initiates early Social Security claiming and retirement for married adult children providing care. At the same, we find that spouses of care providers delay benefit claiming and labor supply exits, resulting in a potentially net ambiguous effect of these shocks on total household retirement income.