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The Second Demographic Dividend as a Driver of China's Growth

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  • Fang Cai

Abstract

As China's demographic transition enters a new stage, the “first demographic dividend” – the economic advantage resulting from demographic changes in recent decades – is bound to disappear permanently. China's future development will be characterized by an aging population. The “second demographic dividend” refers to new sources of economic growth derived from this later population change. This paper reveals major constraints caused by aging in China, which is characterized by a tendency to grow old before becoming rich. As the population ages, human capital improvement slows, labor force participation declines and consumption power reduces. This paper suggests taking advantage of a population “echo effect” to improve human capital at all ages, to enhance workers’ ability to benefit from employment, and to improve the labor participation rate of the elderly, which in turn would increase the income and social security of the aged. These measures are conducive to future economic growth and to the cultivation of the second demographic dividend.

Suggested Citation

  • Fang Cai, 2020. "The Second Demographic Dividend as a Driver of China's Growth," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(5), pages 26-44, September.
    • Handle: RePEc:bla:chinae:v:28:y:2020:i:5:p:26-44
    DOI: 10.1111/cwe.12350
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    References listed on IDEAS

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    1. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2012. "When Fast-Growing Economies Slow Down: International Evidence and Implications for China," Asian Economic Papers, MIT Press, vol. 11(1), pages 42-87, Winter/Sp.
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    4. Xiaodong Zhu, 2012. "Understanding China's Growth: Past, Present, and Future," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 103-124, Fall.
    5. repec:max:cprpbr:007 is not listed on IDEAS
    6. David E. Bloom & David Canning, 2006. "Booms, Busts, and Echoes: How the biggest demographic upheaval in history is affecting global development," PGDA Working Papers 1506, Program on the Global Demography of Aging.
    7. Erik Hurst, 2008. "The Retirement of a Consumption Puzzle," NBER Working Papers 13789, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Xinru Han & Ping Xue & Wenbo Zhu & Xiudong Wang & Guojing Li, 2022. "Shrinking Working-Age Population and Food Demand: Evidence from Rural China," IJERPH, MDPI, vol. 19(21), pages 1-15, November.
    2. Xiao Shen & Jingbo Liang & Jiangning Cao & Zhengwen Wang, 2022. "How Population Aging Affects Industrial Structure Upgrading: Evidence from China," IJERPH, MDPI, vol. 19(23), pages 1-23, December.
    3. Ulrich Schmoch & Birgit Gehrke, 2022. "China’s technological performance as reflected in patents," Scientometrics, Springer;Akadémiai Kiadó, vol. 127(1), pages 299-317, January.
    4. Zhuang Chen & Xiaoshun Li & Weikang He & Jiangquan Chen & Haitao Ji, 2024. "Study on Coupling and Coordination Relationship between Urbanization and Ecosystem Service Value in Jiangsu Province, China," Land, MDPI, vol. 13(2), pages 1-20, February.

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