Inequality in Social Insurance Participation and Generosity: Do Firm Characteristics Matter?

Income inequality in China has been much documented and debated. However, one important aspect of income inequality - social insurance inequality - has been largely understudied. We use a large national panel of firm data to examine the possible influence of various firm characteristics on the inequalities in social insurance participation and generosity in the period 2004-07. Our findings reveal substantial ownership sector and regional gaps in social insurance provision by firms, with the private domestic sector and those in the central region lagging behind. Unionized firms, larger firms, and firms with greater market shares also tend to provide better social insurance to their employees. While being an exporting firm is linked with greater social insurance participation and generosity, being a purely exporting firm, however, is associated with reduced social insurance generosity. Lastly, highly educated workers receive substantially better social insurance coverage than their less educated peers. These social insurance inequalities are highly relevant as China pushes forward with establishing a unified social insurance system across urban-rural boundaries, ownership sectors and industries.