NDLI: New Rural Old-Age Pension Program, Liquidity Constraints and Human Capital Investment

Content Provider	IEEE Xplore Digital Library
Author	Tao Xiang Guangsheng Sun
Copyright Year	2011
Abstract	The new rural old-age pension program is a mixed one. It can relax liquidity constraints through pension income, and strengthen liquidity constraints through pension fee at the same time. Its impact on liquidity constraints and hence on human capital investment is uncertain. This paper constructs a basic two-period household model to analyze human capital investment with or without liquidity constraints. When there are not liquidity constraints, the pension program has no impact on human capital investment. And when there are liquidity constraints, the impact of the new pension program depends on comparison between decreasing return of human capital investment and cross derivative of pension income on the first-period consumption and pension fee. Under perfect credit constraints, households will not participate in the program if return to investment in human capital is high enough. This leads to the vicious reversal financial subsidies to those relatively well-off households, which have no credit constraints and are willing to participate. One way to overcome this effect is to allow for late pension payments for poor rural households, but with an interest rate higher than market interest rate.
Starting Page	1
Ending Page	4
File Size	221158
Page Count	4
File Format	PDF
ISBN	9781424465798
e-ISBN	9781424465811
DOI	10.1109/ICMSS.2011.5998107
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2011-08-12
Publisher Place	China
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Economics Investments Government Humans Educational institutions Pensions
Content Type	Text
Resource Type	Article

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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