Demographic Change and the Labour Supply Constraint
AbstractChina’s economic growth has, hitherto, depended on its relative abundance of production labour and its increasingly secure investment environment. Within the next decade, however, China's labour force will begin to contract. This will set its economy apart from other developing Asian countries where relative labour abundance will increase, as will relative capital returns. Unless there is a substantial change in population policy, the retention of China’s large share of global FDI will require further improvements in its investment environment, in its factor productivity and/or in its labour force participation rates. The links between demographic change, labour participation rates and growth performance are explored here using a new global demographic model that is integrated with an adaptation of the GTAP-Dynamic global economic model in which regional households are disaggregated by age and gender. China’s share of global investment, and hence its growth rate in per capita terms, is found to depend sensitively on its labour force growth and this, in turn, depends on both fertility and labour force participation. Rates of aged participation are low in China but likely to increase and this could offset the growth-retarding effects of fertility decline and ageing.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2006-467.
Length: 26 pages
Date of creation: Jun 2006
Date of revision:
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- 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
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert D. Retherford & Minja Kim Choe & Jiajian Chen & Li Xiru & Cui Hongyan, 2005. "How Far Has Fertility in China Really Declined?," Population and Development Review, The Population Council, Inc., vol. 31(1), pages 57-84.
- Rod Tyers & Iain Bain & Jahnvi Vedi, 2006.
"The global implications of freer skilled migration,"
PGDA Working Papers
1006, Program on the Global Demography of Aging.
- Rod Tyers & Ian Bain & Jahnvi Vedi, 2006. "The global implications of freer skilled migration," ANU Working Papers in Economics and Econometrics 2006-468, Australian National University, College of Business and Economics, School of Economics.
- John Giles & Albert Park & Fang Cai, 2003. "How has Economic Restructuring Affected China’s Urban Workers?," William Davidson Institute Working Papers Series 2003-628, William Davidson Institute at the University of Michigan.
- Guangyu Zhang & Zhongwei Zhao, 2006. "Reexamining China's Fertility Puzzle: Data Collection and Quality over the Last Two Decades," Population and Development Review, The Population Council, Inc., vol. 32(2), pages 293-321.
- Cai Fang & Wang Dewen, 2005. "Demographic transition: implications for growth," Labor and Demography 0512001, EconWPA.
- Liu, Jing & Nico van Leeuwen & Tri Thanh Vo & Rod Tyers & Thomas W. Hertel, 1998. "Disaggregating Labor Payments by Skill Level in GTAP," GTAP Technical Papers 314, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Jörg Mayer, 2003.
"The Fallacy Of Composition: A Review Of The Literature,"
UNCTAD Discussion Papers
166, United Nations Conference on Trade and Development.
- Jörg Mayer, 2002. "The Fallacy of Composition: A Review of the Literature," The World Economy, Wiley Blackwell, vol. 25(6), pages 875-894, 06.
- Fleischer, Belton M. & Yang, Dennis T., 2003. "Labor laws and regulations in China," China Economic Review, Elsevier, vol. 14(4), pages 426-433.
- Rod Tyers & Qun Shi, 2006. "Global Demographic Change, Labour Force Growth and Economic Performance," ANU Working Papers in Economics and Econometrics 2006-462, Australian National University, College of Business and Economics, School of Economics.
- Grilli, Enzo R & Yang, Maw Cheng, 1988. "Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows," World Bank Economic Review, World Bank Group, vol. 2(1), pages 1-47, January.
- Chu Junhong, 2001. "Prenatal Sex Determination and Sex-Selective Abortion in Rural Central China," Population and Development Review, The Population Council, Inc., vol. 27(2), pages 259-281.
- Hussain, Athar, 2002. "Demographic Transition in China and its Implications," World Development, Elsevier, vol. 30(10), pages 1823-1834, October.
- Steven A. Symansky & Peter S. Heller, 1997. "Implications for Savings of Aging in the Asian "Tigers"," IMF Working Papers 97/136, International Monetary Fund.
- Huw McKay, 2008. "Metal Intensity in Comparative Historical Perspective: China, North Asia, the United States & the Kuznets Curve," GDSC Working Papers 006, Institute of Global Dynamic Systems.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.