Is There Moral Hazard in China’s Basic Endowment Insurance Market?

Under the influence of the birth control carried out for years, the growth rate of newborn baby in China has been on a low state. The consequently sharp increase in proportion of elderly population has aggravated the expenditure of China’s social security and the dearth of labourer, impeding the economic development in China. Particularly in China's basic endowment insurance market, aging population increases the financial burden of young generation and makes the supply of the future endowment insurance fund ever unstable. Meanwhile, social security has also become one of the important factors contributing to the current low fertility rate in China, the popularization of which will further affect the population structure and bring moral hazard to the insurance market itself. In this article, based on data from the China General Social Survey, Poisson regression model and Logit model were established, with propensity score matching method and instrumental variable method adopted to eliminate endogeneity problem. This paper will take whether or not to participate in urban/rural pension insurance as explanatory variable, fertility intention and fertility decision as the explained variables. The results show that residents' participation in endowment insurance has a negative impact on their fertility intention and fertility decision. There is moral hazard existing in China's basic endowment insurance market. As for policy implementation, in alleviating the economical burden brought by pensions, the role of maternity welfare and commercial insurance should be considered comprehensively.