Income Redistribution Effects of the Housing Provident Fund: Data Evidence from CHFS

Abstract

This paper constructs an income redistribution model based on CHFS household micro-income data, studies the impact of China's housing provident fund redistribution policy on urban and rural income distribution during 2010-2018, analyzes the mechanism of income redistribution of China's housing provident fund, uses Theil index method to measure the income gap between urban and rural employees, and evaluates the redistribution effect of housing provident fund. The research results show that the housing provident fund affects income redistribution through four ways: employer matching contribution, individual tax deduction in employee contribution, interest benefit of provident fund loan, and investment income of provident fund loan, and forms a circle structure of income redistribution of urban and rural employees. This circle structure leads to a gradually widening income gap between urban and rural five circles. Among them, the income gap of the working population has been significantly expanded in two ways: matching deposit and investment income. The policy implication of this study is that, combined with the essential goal of socialism for common prosperity, we should re-examine the circle structure of the income redistribution of urban and rural working population generated by the redistribution effect of the housing provident fund at the three levels of opportunity, process and result, and further improve the fairness of the housing provident fund policy and the convergence of its distribution structure.