scheme was launched in 1995, and extended nationally in 1998, to provide health insurance covering all urban formal-sector workers (but not their dependents) (Wang and Huang, 2000; and Liu 2002).<sup>8</sup> By the early 2000s, attention turned to the problem of providing social insurance to individuals who were not in formal employment relationships, including the self-employed and uncovered dependents. China’s government settled on a social protection system funded by contributions to individual accounts by individuals, enterprises and local and central governments (Zhang, 2002), but the details remained to be worked out.<sup>9</sup> Growth in the population of migrants in China’s cities from the mid-1990s to the mid-2000s, mainly working in services, construction and export-oriented manufacturing, complicated the expansion of social insurance coverage in China’s urban areas. Migrants tended to be either self-employed or employed informally by firms without receiving any non-wage benefits, thus these new urban residents frequently lacked social insurance.<sup>10</sup> By 2009, changes in rules governing both employer-based social insurance and new voluntary programs aimed to resolve problems insuring migrants, the self-employed and family members.

# **2.2 Trends in Social Insurance Participation, Coverage and Benefit Levels**

Using administrative and population data, we first track implementation of pension, health, unemployment and disability schemes using three metrics that may be calculated similarly for each scheme: the number of participants, the coverage rates of urban employees and urban residents, and benefit levels. In general, programs for urban workers (salaried employees of firms with eight workers or more) mandate participation, although both compliance and enforcement vary by ownership, industry

> the State Council issued the _Determination on Perfecting the Basic Pension System for Enterprise Employees_ that finalized the uniform pension insurance scheme.  In 1998, the State Council announced the _Determination to Establish a Basic Medical Insurance System for Urban Workers_ . In 1999, the _Regulation on Unemployment Insurance_ was issued to provide temporary income replacement.

> 8As we only touch lightly on urban and rural health insurance initiatives, the reader may wish to consult the more comprehensive reviews of Leung, Wagstaff, Lindelow and Lu (2007) and Wagstaff, Yip, Lindelow, and Hsiao (2009). Hsiao (1995) and Liu and Hsiao (1995) provides a useful early review of China’s health system and cost issues in existing health insurance reform, respectively, prior to the reforms of the late 1990s. Gao et al (2001) provide evidence of a lack of equity in access to health services as of the late 1990s.).

9In addition to the social insurance system, new social assistance programs were initiated based on a minimum living standard guarantee program (the _dibao_ ) were introduced to complement existing _wu bao_ and _te kun_ programs for individuals too infirm to work and lacking family support.

> 10 Throughout the paper we follow the International Labor Organization’s definition of informal status: a worker is informal if not receiving social insurance benefits. Strictly speaking, this will include wage-earning employees who are informally employed and self-employed workers. Researchers working in China argue in favor of using the presence of an employment contract as an indicator of informality. As this definition reduces comparability with the international literature and evidence, we follow the ILO standard in this paper. Frequently, it is also useful to distinguish further between informal employees and the self-employed.

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