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Fertility and old-age labor supply in aging China

Author

Listed:
  • Qiao, Xue
  • Wang, Lili

Abstract

This paper studies the fertility and old-age labor supply decisions of Chinese households along with the relaxation of fertility control and a rise in life expectancy. We first build an overlapping-generations model, where agents make endogenous fertility and old-age labor supply decisions in the presence of fertility constraint. In our model, children serve as an alternative saving technology since they provide intra-family transfer for their old-age parents. Our analytical results suggest that the impact of rising life expectancy on fertility depends on whether children are more like consumption goods or saving vehicles. Relaxing fertility control would induce more leisure in the old age, while a rise in life expectancy would lead to more old-age labor supply. We then calibrate the model to Chinese economy and find that a rise in life expectancy would discourage fertility as intra-family transfer becomes less important. In addition, the implementation of two-children policy rather than full relaxation of fertility control, a rise in child-rearing cost, and an expansion of social security would also reduce fertility, partly offsetting the effects of relaxing one-child policy.

Suggested Citation

  • Qiao, Xue & Wang, Lili, 2019. "Fertility and old-age labor supply in aging China," China Economic Review, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:chieco:v:57:y:2019:i:c:s1043951x18301731
    DOI: 10.1016/j.chieco.2018.12.004
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    Cited by:

    1. Zhao Zhang & Caoyuan Ma & Aiping Wang, 2023. "Environmental Governance, Public Health Expenditure, and Economic Growth: Analysis in an OLG Model," IJERPH, MDPI, vol. 20(4), pages 1-21, February.
    2. Yang, Xiaojun & Wen, Qiang & Ma, Jie & Li, Jun, 2020. "Upward mobility and the demand for children: Evidence from China," China Economic Review, Elsevier, vol. 60(C).

    More about this item

    Keywords

    One-child policy; Labor supply; Demographics; Intra-family transfer;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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