Establishing a Sound Social Security System and the Fertility Desire of Residents: From the Perspective of Long-Term Care Insurance
ZENG Lifei, XIN Zichen, XU Zhi, CAO Wei
School of Finance, Zhejiang Gongshang University; School of Finance/Institute of Chinese Financial Studies, Southwestern University of Finance and Economics
Summary:
The 20th National Congress of the Communist Party of China outlined clear plans for improving the multi-tiered social security system and implementing a national strategy to actively address population aging. Currently, China faces a severe aging population issue. In 2023, the number of people aged 60 and above exceeded 290 million, accounting for 21.1% of the total population. Among them, the proportion of elderly individuals with functional impairment or cognitive disorders stood at 11.6%, amounting to approximately 35 million. Population aging is also accompanied by sub-replacement fertility, with China's total fertility rate dropping to just 1.02 in 2023. The low fertility rate is primarily attributed to high fertility costs, significant parenting pressures, and the considerable burden of elderly care. In households with functionally impaired older adults, the heavy caregiving responsibilities can easily lead to a situation where “one member's disability disrupts the entire household,” thereby affecting the ability to raise the next generation. In response, China established a Long-Term Care Insurance system in 2016. By 2024, the number of participants in the pilot cities had reached 187.8634 million, with 1.4625 million beneficiaries, indicating that the implementation of the Long-Term Care Insurance system has achieved initial success. It effectively alleviates the elderly care burden on families and may consequently influence residents' fertility behavior. The existing literature generally posits that a well-developed social security system tends to significantly reduce fertility intentions. However, some studies also suggest that subsidized social security policies may have a positive effect on fertility rates. Although Long Term Care Insurance (LTCI) shares similarities with other social security policies-as part of the broader social security framework, it may suppress fertility by reducing the perceived old-age support utility of children—its distinctive feature lies in its targeted provision of care services and financial subsidies for functionally impaired elderly. This helps alleviate the burden on families facing the challenge of “one member's disability disrupting the entire household,” thereby reducing the caregiving pressure on family members. Simultaneously, LTCI can indirectly increase household disposable income, enabling a reallocation of family resources from “elderly care” to “childbearing,” which may ultimately enhance fertility rates in families with impaired elderly members. Based on this analysis, this study proposes the following research questions: As a critical initiative in strengthening the social security system, how does the establishment of the Long Term Care Insurance system affect fertility rates？ What is the underlying mechanism？ The main research findings of this paper are as follows: (1) Theoretical analysis indicates that Long-Term Care Insurance (LTCI) suppresses fertility rates in both non-disabled and disabled families by reducing the old-age security utility of “raising children to prepare for old age.” However, LTCI can also enhance fertility in disabled households through a resource reallocation effect. (2) Empirical findings reveal that LTCI inhibits fertility rate in non-disabled families, with this negative effect being more pronounced among high-income households, families with better access to healthcare, and urban rather than rural households. (3) The net effect of LTCI on fertility rate in disabled families is positive, meaning it contributes to an increase in fertility rates. (4) Extended analysis shows that adopting a care model that integrates family-provided care and formal care services helps improve fertility rates in both types of families. The marginal contributions of this study are as follows: (1) This paper introduces the resource reallocation effect of Long-Term Care Insurance (LTCI) as a novel mechanism and develops a theoretical model illustrating how LTCI influences fertility rates through both the old-age security utility of raising children and the resource reallocation effect. The core distinction between LTCI and traditional social security lies in its provision of professional nursing services, which effectively alleviates the care burden on families with disabled elderly members. This enables the reallocation of household resources from elderly care to childbearing, thereby potentially increasing fertility rates in such families. (2) This study is the first to systematically examine the impact of LTCI on fertility rates from the perspective of its implementation, categorizing households into non-disabled and disabled families for both theoretical and empirical analysis. Furthermore, it incorporates family-provided care as a moderating variable to explore whether an integrated model combining family care and formal care services can mitigate the potential adverse effects of LTCI on fertility rates. The findings aim to provide new policy insights for the sustainable development of the social security system. The policy suggestions are as follows: (1) The government should expand the coverage of Long-Term Care Insurance (LTCI) and increase the supply of formal care services, with particular emphasis on strengthening formal care security in rural areas. As of June 2024, there were only 16,000 nursing homes in rural China, reflecting a severe shortage of elderly care services. Therefore, the LTCI system should be gradually extended from urban pilot areas to rural pilot regions, accompanied by efforts to increase the number of rural care institutions, diversify service offerings, and enhance the professional skills and service quality of caregivers. These measures would help address the elderly care challenges faced by families with disabled members in rural areas. (2) The government could further optimize the LTCI system by adopting an integrated development model that combines family-provided care and formal care services, thereby improving residents' fertility rates and enhancing the sustainability of the social security system. In practice, several cities have already innovatively implemented such integrated models. For example, Wenzhou allows relatives to provide nursing services; Tianjin offers subsidies and professional training for family caregivers; and the Dongying Branch of China Life Insurance Company Limited promotes a model of “home-based care by relatives with on-site guidance from institutions.” (3) The government should supplement the establishment of a robust social security system with supportive policies such as childcare services and fertility subsidies. Specifically, measures including increasing fertility subsidies, expanding the supply of affordable childcare services, and extending marriage and maternity leaves could help reduce the costs associated with childbirth and child-rearing.
曾利飞, 辛子辰, 许志, 曹伟. 健全社会保障体系与居民生育率——基于长期护理保险视角[J]. 金融研究, 2025, 545(11): 58-76.
ZENG Lifei, XIN Zichen, XU Zhi, CAO Wei. Establishing a Sound Social Security System and the Fertility Desire of Residents: From the Perspective of Long-Term Care Insurance. Journal of Financial Research, 2025, 545(11): 58-76.
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