Noncontributory Pensions and Mental Health: Evidence from Rural China

The extent to which wealth and public policy can shape mental health outcomes has been studied previously, but how noncontributory pensions can, either temporarily or permanently, alleviate mental illness remains unclear. This paper exploits the staggered introduction of the New Rural Pension Scheme between 2009 and 2012 in a difference-in-differences framework. Using CHARLS data from 2011-2018, we reveal an effect of approximately 60% on pension take-up, a 900 yuan increase in yearly pension income and crowding out of transfers from children and grandchildren. We find positive effects on in mental health and a reduction in depressive symptoms, while private intrafamily transfers are crowded out.