ABSTRACT
This chapter explores what economic results an expansive and localised pension scheme can generate and argues that an urban pension programme facilitates the formation of industry specific skills. By dealing with labour market risks associated with specific skills and thus ensuing the stability of lifetime income, the urban pension programme encourages students to acquire such skills by attending vocational education. The chapter discusses the effects of pension programmes on labour mobility, and examines how this affects the training decisions made by employers. It shows how Chinese employers perceive the benefits of social insurance programmes in terms of retaining workers and protecting their investments in employee skill formation, and how they form social policy preferences. The chapter also suggests that statistical analysis of both of the micro- and macro-level data supports the hypothesis that pension coverage lengthens job tenures and lowers migration across localities.
