I examine heterogeneous returns to post-compulsory education attainment (high school degree or above) in China by exploiting the variation in the educational attainment caused by a reform that introduces compulsory education with different implementation dates across provinces. Using data from China Household Finance Survey (CHFS), I find that individuals who are less likely to have post-compulsory education have higher returns to education. This finding contradicts the common conclusion on post-compulsory education that individuals select them into education based on gains. One explanation for this pattern is that children who are less likely to be enrolled in the education system have more disadvantaged backgrounds and lower wages without educational attainment. Education acts as an equalizer that leads to more homogeneous wages, resulting in larger returns for children who are less likely to be reached by post-compulsory education.

People experience multiple changes in their lives after retirement which can affect their mental health. In this paper, we examine the mediating impact of grandparental childcare in the effect of retirement on mental health among elderly women in Europe. We apply a semi-parametric estimation strategy to disentangle the total effect of retirement on mental health into a direct effect, and an indirect effect mediated through grandparental childcare. We find that retirement directly leads to a significant increase in mental health problems. However, this effect is completely offset by a significant reduction in mental health problems generated by a mediating effect of grandparental childcare. As a result, the total effect of retirement on mental health is close to zero. We then examine country-specific heterogeneity in the provision of public childcare and find that the mediating effect unfolds its full compensating strength in countries in which grandparental childcare is supplemental to public childcare. Our results have important implications for designing old-age social policies.

Declining fertility and increasing health expenditure associated with aging populations pose great challenges to public finance globally. This paper studies the hidden cost of fertility by analyzing the causal effect of fertility on the elderly’s healthcare utilization. We use the instrumental variable approach to account for the potential endogeneity in the fertility choice, exploiting the exogenous variations in fertility induced by the “1.5-Child Policy” in rural China. We find that having more children increases the probability and out-of-pocket expenditures of using formal and informal healthcare. Increased healthcare use can be driven by deteriorating physical and mental health and increasing intergenerational support. Children of the elderly are more likely to help them pay health costs and make monetary transfers to their parents, suggesting that the increased burden of healthcare cost is partly borne by the children. Women and lower educated parents who have limited economic resources and less generous health insurance tend to bear a higher increase in health costs with more children. The results imply that the true cost of birth-encouraging policies can be underestimated if the effect of fertility on healthcare utilization is overlooked, and such policies might increase inequality if no supportive measures are provided to disadvantaged groups.

The oil product pricing mechanism is a regulation system that was introduced in the late 1990s to control the oil product prices in China. For the first time to our knowledge, we provide an empirical evaluation of this regulation system, with a particular focus on its role in China’s macroeconomy. Based on monthly data between 2000 and 2013, we find that: (i) contrary to the general public’s impression, the mechanism is ‘fair’ overall in the sense that it responds to the rise and fall of international oil price symmetrically; (ii) the effect of the mechanism on the Chinese economy, however, is very limited; and (iii) the limited effect of the mechanism holds for different levels of regulation during the studied period, suggesting that potential deregulation may have little impact on the economy.