The shattered "Iron Rice Bowl": effects of Chinese state-owned enterprise reform on depressive symptoms in later life

Abstract

Objectives: The SOE reform was the first time that economic insecurity was introduced since 1949 in China, with hundreds of million employees affected by the laid off. This study took the State-Owned Enterprises (SOE) reform in China as a natural experiment to explore the impact of economic insecurity on depressive symptoms in later life.

Methods: Data were obtained from the China Health and Retirement Longitudinal Survey (CHARLS), 2014 and 2015. CHARLS is a nationally representative survey covering 28 provinces in China. CHARLS used the probabilities proportional to size (PPS) sampling method and involved 450 villages/resident committees, 150 counties/districts and 12,400 households. A total of 5113 urban dwellers born earlier than 1971 (aged 25 years old and above at the start of the SOE reform, 1995) were involved. Using the province-level economic loss from the layoffs, we examined the impact of economic insecurity exposure on the score of depressive symptoms using a difference-in-differences model (DID).

Results: Individuals with economic insecurity exposure had a significantly increased risk of higher depressive symptoms scores, in which a 1 percentage point increase in expected economic loss would increase the CESD-10 score by 0.10. For an individual at the median distribution (CESD-10 = 5), this implies a shift to the 58th percentile (CESD-10 = 6). Given that the average intensity of expected economic loss is 10.22% and the mean CESD-10 is 6.92, exposure to the SOE reform led to an average increase in the CESD-10 score by 1.02 and by at least 14.74%. The heterogeneity analyses showed that the role of SOE reform in depressive symptoms scores was robust in both female and male groups and groups with different educational attainment.

Conclusions: Economic insecurity exposure increased the depressive symptoms score later in life in the context of China. Programs, such as adequate unemployment insurance benefits, can protect individuals against the risk of financial loss, thereby reducing their negative impact on depressive symptoms. Providing mental symptoms surveillance and psychological counseling to those experienced at a time of great uncertainty is important for preventing depression in times of economic insecurity.

Keywords: Chinese state-owned enterprise reform; Depressive symptoms; Economic insecurity exposure; Later life.