This paper estimates the effect of trust in government on rural residents’ contributions in China’s rural pension program using the Propensity Score Matching (PSM) method. We construct an analytical framework for rural residents' decision-making in pension program and provide analysis using data from China Family Panel Studies (CFPS) and 25 provincial Departments of the Human Resources and Social Security (DOHRSS) in China. Our analysis shows that rural residents’ trust in government will influence their contributions to the pension programs by affecting their expected return of the investments. Our results suggest that the government should improve rural residents’ trust in government in order to develop a successful and sustainable rural pension program.
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Subject: Business, Economics and Management - Economics
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