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Demographic change and long‐term growth in China: Past developments and the future challenge of aging

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  • Minchung Hsu
  • Pei‐Ju Liao
  • Min Zhao

Abstract

This paper explores the influence of demographic changes, particularly the sharp decline in fertility and the evolution of the population age structure, on economic development in China. A general equilibrium overlapping generations model with endogenous decisions on fertility, educational investment, and factor accumulation is employed for our analysis. The family support provided by children to the elderly, which is a component of traditional culture in Chinese society, is also considered. We find that technological changes matter most for growth. Demographic changes, on average, account for approximately 4% of the growth in China, while the effect is negative in the pre‐1980 period. With an extension to include population aging, we find that aging is not necessarily adverse to growth. This finding reflects the fact that a longer life expectancy requires more savings and makes educational investment in children more attractive, which accelerates physical capital and human capital accumulation. However, if the social norm of family support for aging parents is strict, aging will significantly increase the children's burden and crowd out physical and human capital accumulation.

Suggested Citation

  • Minchung Hsu & Pei‐Ju Liao & Min Zhao, 2018. "Demographic change and long‐term growth in China: Past developments and the future challenge of aging," Review of Development Economics, Wiley Blackwell, vol. 22(3), pages 928-952, August.
    • Handle: RePEc:bla:rdevec:v:22:y:2018:i:3:p:928-952
    DOI: 10.1111/rode.12405
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    Cited by:

    1. Roman Matousek & Chunchao Wang, 2021. "The economic challenges and opportunities of urbanization and migration in China," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 3-5, February.
    2. Jinqi Ye & Ziyan Chen & Bin Peng, 2021. "Is the demographic dividend diminishing in China? Evidence from population aging and economic growth during 1990–2015," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2255-2274, November.
    3. Nakabayashi, Masaki, 2019. "From family security to the welfare state: Path dependency of social security on the difference in legal origins," Economic Modelling, Elsevier, vol. 82(C), pages 280-293.
    4. Tingting Li & Hongwei Lu & Qiyou Luo & Guojing Li & Mingjie Gao, 2024. "The Impact of Rural Population Aging on Agricultural Cropping Structure: Evidence from China’s Provinces," Agriculture, MDPI, vol. 14(4), pages 1-19, April.
    5. Kai-ling Ou & Ming Yu Claudia Wong & Pak Kwong Chung & Kei Yee Katie Chui, 2022. "Effect of Square Dance Interventions on Physical and Mental Health among Chinese Older Adults: A Systematic Review," IJERPH, MDPI, vol. 19(10), pages 1-16, May.

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